KUALA LUMPUR: Malaysian palm oil futures rallied up to 3.2% on Tuesday to their highest since March 31 on expectations of a spike in June exports after the country moved to exempt the commodity from an export duty this year.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed 40 ringgit, or 1.7%, up at 2,388 ringgit ($558.99) a tonne. Trading resumed on Tuesday after a long weekend.
Malaysia last week said it would free palm oil from export duties until December in a move that traders said makes it more competitive against Indonesian palm oil and could boost shipments by 1 million tonnes.
But it could shift the product mix of palm oil exports in favour of crude palm oil over processed palm oil and reduce the value add of Malaysia palm oil exports, the regional head of plantations research at CGS-CIMB Research, Ivy Ng, said in a note. "Expectations of lower palm oil production in May and low vegetable oil stocks in India and China are also supporting the bullish sentiment," said Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group.
Palm oil exports over June 1-10 could surge by between 45% and 79% from the previous month, traders said.
The Malaysian Palm Oil Board is scheduled to release May supply and demand data on Wednesday.
The most-active Dalian soyaoil contract gained 1.8%, while the exchange's palm oil contract rose 3.16%.
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