KUALA LUMPUR, Nov 5: Malaysian crude palm oil leapt as much as 9 per cent on Wednesday as oil prices held some of the previous day’s surge while financial markets perked up.

India’s move to defer reimposing import duties on crude vegetable oil and Malaysia scrapping duties on imported fertiliser helped keep the palm market buoyant although fears of a deepening global recession later swept away some gains.

The market realises that palm oil is getting significantly undervalued,” said Morgan Stanley analyst Fordyanto Widjaja.

Even though it may take a year or so for palm to recover, production is likely to slow, going forward, and the replanting schemes by Malaysian planters should help.” Prices have plummeted nearly two-thirds from a peak in March of 4,486 ringgit on ballooning stocks and slow shipments.

The benchmark January contract rose as much as 145 nggit to 1,723 ringgit ($489) per ton before settling up 62 ringgit at 1,640 ringgit.

Over the past week Malaysia, the world’s second largest producer, has announced initiatives to spur the palm industry, which include imposing biofuel mandates, reinforcing replanting scheme and scrapping fertiliser import duties.

Singapore-listed Wilmar jumped 4.3 per cent while Indonesia’s largest palm producer Astro Agra Lestari gained 2.5 per cent.

Affin Investment Bank said Malaysian planters may boost their net profits by 0.5 per cent to 2.0 per cent after the government announced plans to scrap a 5 per cent import duty for 7 types of fertilisers, which account for a huge chunk of input costs.

In Indonesia, world’s largest crude palm oil producer, palm prices surged, boosted by sharp increase in Malaysian palm future earlier in the day.

In Jakarta, the state marketing centre, which sells palm oil from state plantations, said it sold palm oil at 5,072 rupiah ($0.47) per kg, up from 4,900 rupiah per kg on Monday.

The centre did not sell the entire 11,500 tons of crude palm oil it offered at an auction on Tuesday.

Meanwhile, refiners in Jakarta sold refined, bleached deodorised (RBD) palm olein, which is used in cooking oil, at 5,625-5,700 rupiah per kg, up from 5,300 per kg on Tuesday.

In Malaysia’s physical market, crude palm oil for November shipment in the southern region was 1,645/1,660 ringgit. Trades were done between 1,650 and 1,670 ringgit

.—Reuters