KUALA LUMPUR: Malaysian palm oil futures bounced back on Monday, after six consecutive losing sessions, lifted by stronger Dalian soyoil prices and as traders bought cheaper contracts after the recent bout of declines.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 112 ringgit, or 2.53%, at 4,545 ringgit ($1,012.93) a metric ton at the close.
Crude palm oil was trading higher as investors lapped up cheaper contracts after recent declines and as some prices ticked up, including Dalian soyoil and rapeseed oil futures, said Anilkumar Bagani, commodity research head at Sunvin Group.
Dalian’s most-active soyoil contract rose 1.09%, while its palm oil contract gained 0.57%. Soyoil prices on the Chicago Board of Trade were up 1.23%. The rapeseed oil futures contract at the Zhengzhou Commodity Exchange rose 1.12%.
Palm oil tracks price movements of rival edible oils as it competes for a share in the global vegetable oils market.
Meanwhile, Indonesia said it would increase its exports levy for crude palm oil to 10% from the current 7.5% to finance higher biodiesel subsidies.
“The news of Indonesia raising its export levies and launching the B40 biodiesel mandate from Jan. 1 has also provided some support to the bullish cause,” Sunvin’s Bagani said.
Oil prices rose on Monday as lower-than-expected US inflation data revived hopes for further policy easing, although the outlook for a supply surplus next year weighed on the market.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.42% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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