KUALA LUMPUR: Malaysian palm oil futures plunged to an intraday low of 6.7% on Thursday after Indonesia removed its export restrictions, but the contract pulled back significantly as crude prices surged.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended down 127 ringgit, or 2.09%, to 5,940 ringgit ($1,416.48) a tonne.
Palm has fallen 11% so far this week, erasing most of the gains following Russia’s invasion of Ukraine in late-February.
Top producer Indonesia will remove export volume restrictions on palm oil products and raise export levy ceiling instead, its trade minister said in a surprise policy U-turn just a week after it shocked markets by further tightening curbs.
The ceiling of palm export tax and levy would be raised from a combined maximum of $375 per tonne to $675 per tonne. The maximum crude palm oil tax would be applied when prices reach $1,500 per tonne, Trade Minister Muhammad Lutfi said.
Indonesia Palm Oil Association said removal of the curbs was welcomed but the group was still awaiting details on the export levy increase.
Further pressuring prices, Malaysia’s Southern Peninsula Palm Oil Millers’ Association on Wednesday estimated March 1 to 15 output to have risen 33% from the month before, traders said.
Oil prices climbed 4% after the International Energy Agency said three million barrels a day (bpd) of Russian oil and products could be shut in from next month and despite the US Federal Reserve’s decision to raise interest rates.
Stronger crude makes palm a more attractive option for biodiesel feedstock.
In related oils, Dalian’s most-active soyoil contract fell 0.8%, while its palm oil contract were down 3.7%. Soyoil prices on the Chicago Board of Trade were up 1.1%.
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