Palm Oil Advances a Second Day on Optimism Exports Recovering

July 15 (Bloomberg) -- Palm oil futures in Malaysia rallied for a second day to the highest since July 7 after exports gained this month and India, the second-largest user, said it won’t impose higher taxes on the commodity.

“Everything hinges now on demand,” Carey Wong, an analyst at OCBC Investment Research Pte., said by phone from Singapore. The market is “definitely” seeing a recovery in demand from overseas buyers, she added.

Palm oil for September delivery gained 4.2 percent to 2,122 ringgit ($595) a metric ton on the Malaysia Derivatives Exchange at 3:45 p.m. local time. The contract has jumped 6.6 percent in the last two days.

Shipments from Malaysia, the second-largest producer, increased to 659,143 metric tons in the first 15 days of July, 18 percent higher than the same period in June, according to surveyor Intertek. Societe Generale de Surveillance, another surveyor, estimated a 15 percent gain to 653,474 tons.

India has no plans to increase duties on imports of palm oil, Commerce Minister Anand Sharma said today in a written reply to a member’s query in the upper house of Parliament. Maintaining duty-free crude palm oil imports and the 7.5 percent tax on refined, bleached and deodorized palmolein would ensure supplies remain at “affordable” rates, he said.

Palm oil is “riding on this economic recovery story as well as higher crude oil prices,” OCBC’s Wong said. Higher crude prices can lead gains in the tropical commodity as palm oil can be used to produce biofuels.

Crude oil for August delivery in New York added as much as 1.9 percent to $60.67 a barrel in Asian trading and was at $60.51 a barrel at 3:42 p.m. Singapore time.

Economic growth in China, the world’s third-largest economy and biggest user of edible oils, rebounded to 7.8 percent in the second quarter, according to a Bloomberg News survey of economists.