Malaysian palm oil futures rose on Thursday, moving in tandem with crude oil and soybean oil, amid prospects of a recovery in Indian demand in Q3 ahead of festivities.
The Bursa Malaysia Derivatives' August crude palm oil contract gained 1.59% to 4,602 Malaysian ringgit ($1,124.61) per metric ton. The September contract climbed 1.90% to 4,670 ringgit/mt.
India's imports of edible oil are expected to hit 1.5 million tons a month between July and October, Reuters reported, citing industry sources.
The Malaysian Palm Oil Council also projects that Indian demand will rebound from July through September as suppliers restock ahead of Diwali.
A potential rise in imports could deplete currently elevated inventories in producing countries, where stocks have built up due to high seasonal production and weak demand.
However, price gains were capped as Malaysia's recent export levels declined.
Cargo surveyors reported that July 1-20 shipments ranged from a 0.9% decline to a 4.1% increase from a month earlier. This compares with a 4% to 12.4% month-over-month rise during the July 1-15 period.
"This indicates a marked weakening in export demand during the latter part of the month," market intelligence provider SunSirs said.
Current spot fundamentals are weak, price reporting agency MySteel said, as "supply-demand pressure in palm oil-producing regions remains significant."
"...growing market expectations of ample palm oil supplies are exerting bearish pressure on spot prices," according to SunSirs.
In August, prices are expected to trade between 4,400 ringgit/mt and 4,650 ringgit/mt, the MPOC said, but subdued demand and persisting high inventories will likely limit price upside.