KUALA LUMPUR: Malaysian palm oil reversed course to close higher on Tuesday on prospects of top producer Indonesia raising export tax, although expectations for stronger output and weaker exports capped gains.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended up 32 ringgit, or 0.54%, at 6,010 ringgit ($1,426.88) a tonne. It had earlier declined as much as 2.64%.
Traders said a millers’ association on Monday estimated March 1-25 production rose 15.3% from the month before, while cargo surveyors said last week that exports during the same period fell 5% month-on-month.
“Heavy selling in crude oil and soyoil last night added to selling pressure today,” a Kuala Lumpur-based trader said, adding that traders were bargain hunting.
The contract rebounded on expectations that Indonesia will hike its reference price used to determine the level of export tax and levy, according to traders. Higher export duties in Indonesia makes rival Malaysian palm oil more competitive.
In top buyer India, traders have contracted 45,000 tonnes of Russian sunflower oil at a record high price for shipments in April as edible oil prices in the local market surged after supplies from rival Ukraine stopped, five industry officials told Reuters.
Dalian’s most-active soyoil contract fell 0.6%, while its palm oil contract gained 0.4%. Soyoil prices on the Chicago Board of Trade were up 1.2%, after declining 3% overnight.
Oil prices rose, recovering some of the previous session’s losses as Kazakhstan’s supplies continued to be disrupted and major producers showed no sign of being in a hurry to boost output significantly.
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