KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday, lifted by strength in rival edible oils and as demand expectations improved, according to traders based in Kuala Lumpur.
"We're seeing a bit of bargain-buying ... Exports could improve as buyers rush to take advantage of Malaysia's tax suspension," said a Kuala Lumpur-based futures trader, referring to a three-month palm oil export tax suspension expected to increase demand and boost prices.
The Malaysian government introduced the move in early January. The zero tax is set to end on April 7.
The gains may not be sustainable, though, as production in March is expected to rise, said the trader.
"Production is set to recover strongly," he said.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.5 percent at 2,392 ringgit ($612.55) a tonne at the midday break, set for a second straight day of gains.
Before eking out a gain of 0.2 percent on Monday, the contract fell to its lowest in more than 1-1/2 years at 2,350 ringgit a tonne.
Trading volumes on Tuesday at midday stood at 17,542 lots of 25 tonnes each at the midday break.
Another trader said that gains in related edible oils such as soyoil on the US Chicago Board of Trade and China's Dalian Commodity Exchange lent support to palm.
Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.
The Chicago Board of Trade's May soybean oil contract gained 0.5 percent on Monday, and was slightly up on Tuesday by 0.1 percent.
The May soybean oil on China's Dalian Commodity Exchange rose 0.2 percent and the Dalian May palm oil contract rose 0.1 percent.
Palm oil may bounce into a range of 2,403-2,420 ringgit per tonne, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
Comments
Comments are closed for this article.