Palm oil prices continue to rise on forecasts of reduced harvest and stocks in Malaysia

Forecasts of a reduction in palm oil production due to the worst floods in a decade in Malaysia are fueling speculative growth in quotes. They are also supported by higher export duties and taxes in Indonesia, the world's largest exporter of palm oil.

Indonesia raised the base price of crude palm oil (CPO) from $961.97/t in November to $1,071.67/t in December, raising the export duty from $124/t to $178/t.

India increased edible oil imports to a 4-month high in November as refiners stepped up purchases to replenish stocks after high demand during the festive season, also fueling speculative prices.

February palm oil futures on Bursa rose 2.1% to 5,138 ringgit/t or $1,161/t yesterday on forecasts of reduced inventories. Final data on Malaysian palm oil stocks is due on Dec. 10, but traders expect them to contract for a second straight month in November to 1.79 million tonnes as heavy rains halted production.

In Indonesia, in the main oil palm growing areas, excessive rainfall led to landslides and slowed the harvest, but in other regions, moderate rainfall contributed to a good oil palm harvest.

The rise in palm oil prices in the near future may lead to the recovery of sunflower oil prices in Ukraine.