Palm oil rises for third day; Malaysian export tax eyed

KUALA LUMPUR: Malaysian palm oil futures gained for a third straight session on Monday, on higher prices of rival soybean and crude oil, with expectations of lower output aiding sentiment.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 12 ringgit, or 0.35%, to 3,442 ringgit ($850.30) a tonne by the midday break.

Palm is trading just $4 below rival soyoil on the Chicago Board of Trade, which is up 0.7%.

"There will be a push and pull on palm futures to reclaim the discount to bean oil," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

The focus is now Dec 1-15 export volume data, due on Tuesday, and the announcement of Malaysia's crude palm oil export tax for January, which will effectively end a six-month tax exemption.

"(Palm) futures are likely to see a downward move on the announcement as it makes Malaysian crude palm oil more expensive in the export market as ringgit is already sharply higher," Varqa said.

The ringgit, palm's currency of trade, rose 0.05% against the dollar. A stronger ringgit makes the edible oil more expensive for holders of foreign currency.

Meanwhile, the Malaysian Palm Oil Board (MPOB) said last week November production fell 13.51% from October to 1.49 million tonnes, its lowest since March.

The market expects output in December to remain squeezed as rainy weather brought on by La Nina is expected to persist until the first quarter of next year.

Dalian's most-active soyoil contract rose 1.3%, while its palm oil contract gained 1%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices rose on Monday, pushing Brent back above $50 a barrel, making palm a more attractive option for biodiesel feedstock.