Malaysian crude palm oil futures rose 2.1 percent on Thursday, reversing more than a week of losses as Indonesia's decision to maintain an export tax on palm oil products for the next few months boosted the market.
The benchmark September contract on the Bursar Malaysia Derivatives Exchange settled up 49 ringgit, or 2.1 percent, at 2,383 ringgit ($688) a tonne. "Indonesia's plan to maintain the export taxes might be reversing the downtrend of this market," said a leading trader. "Players seem to be returning to the market in a big way after many days of thin trading volumes."
Another trader said: "Volumes are much higher and this could be due to speculative buying. Whether this is fresh buying interest remains to be seen."
Other traded months rose between 32 and 79 ringgit in overall trade of 12,195 lots of 25 tonnes each. But palm oil is nearly 14 percent off a historic high of 2,764 ringgit reached this month as worries of a stock build-up due to weakening exports persist.
September palm oil on Singapore's Joint Asian Derivatives Exchange rose 2.5 percent to $689.50 a tonne with distant months posting gains in lacklustre trade.
Indonesia is likely to maintain an export tax on palm oil at 6.5 percent for the next two to three months to see its effectiveness in lowering local prices, Bay Krisnamurthi, deputy to the chief economics minister, said on Wednesday.
This month, it raised the export tax on crude palm oil to 6.5 percent from 1.5 percent and palm oil by-products to 6.5 percent from 0.3 percent to ease local prices. The Southeast Asian nation also has no plans to impose a palm oil export quota, but is working on efforts to help ensure ample cooking oil supplies for the domestic market, a senior agriculture ministry official said on Thursday.
In Malaysia's physical market, crude palm oil for June and July shipments was quoted at 2,515/2,525 ringgit a tonne. Trades were done between 2,500 and 2,515 ringgit.
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