KUALA LUMPUR: Malaysian palm oil futures rose for a third straight session on Tuesday, as traders weighed top producer Indonesia’s plan to raise its biodiesel mandate against declining exports and lower-than-expected production.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 30 ringgit, or 0.72%, to 4,187 ringgit ($944.08) a tonne by the midday break. The market reopened after a long weekend on Tuesday.
Malaysia’s end-June palm oil stocks rose 8.8% from the previous month to 1.66 million tonnes, according to Malaysian Palm Oil Board (MPOB) data released during the midday break.
Crude palm oil production climbed 5.8% from May, missing market expectations. Exports plunged 13.3% to 1.19 million tonnes amid rival Indonesia’s efforts to boost its domestic and international demand for the edible oil.
Indonesia, the world’s largest producer, plans to increase the content of palm oil-based fuel in its biodiesel to 35%, known as B35, from 30%, starting July 20, senior energy ministry official Dadan Kusdiana said last week.
Malaysia’s exports during July 1-10 fell 20.5% to 330,310 tonnes from the same week in June, cargo surveyor Intertek Testing Services said on Sunday.
Talks of a recession and a downward correction in crude oil prices may also limit the temporary upside in palm oil markets, as destinations markets have not come up with big buying programmes, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
In related oils, Dalian’s most-active soyoil contract rose 1.1%, while its palm oil contract fell 0.7%. Soyoil prices on the Chicago Board of Trade were up 0.3%.
Palm oil looks neutral in a range of 4,090-4,267 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
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