KUALA LUMPUR: Crude palm oil (CPO) rallied 1.9% to a high of RM2,490 per tonne yesterday after hitting a two-month low in intra-day trading after China announced its economy in the fourth quarter (4Q) grew beyond expectations.

April delivery for palm oil on the Malaysia Derivatives Exchange settled at RM2,488 per tonne, an increase of 1.8% or RM44 per tonne. The price fell to a low of RM2,407 in the morning.

CPO rose following China’s better-than-expected economic numbers. China’s economy expanded 8.7% in 2009 from a year earlier, surpassing the government’s full-year growth target of 8%. The country’s economy rose 10.7% year-on-year in 4Q last year.

Bloomberg had reported that the earlier drop in CPO price was due to concerns that China, the largest consumer of edible oils, may import less palm oil this year because of ample supplies of domestic and imported oilseeds and oils.

The China National Grain & Oils Information Center announced yesterday that China’s vegetable oil purchases may fall to below nine million tonnes. It said palm oil imports rose 23% last year to an all-time high of 6.4 million tonnes while rapeseed imports reached 3.2 million tonnes.      

The agency attributed the expected lower imports this year to higher domestic soybean and oilseeds supplies.

While CPO exports have increased, the commodity has seen its prices coming down. According to Societe Generale de Surveillance, exports gained 6.9% in the first 20 days of January to 945,311 tonnes while cargo surveyor Intertek said exports rose 7.7% to 924,003 tonnes for the same period.

CPO has been on the downtrend of late due to the bumper soybean crop and edible oils supply. March delivery of soybeans added five cents to US$9.55 (RM32.18) a bushel.

According to Bloomberg data, soybean oil’s premium over palm oil narrowed to US$75 a tonne this week, the lowest price in at least a year.