KUALA LUMPUR: Malaysian palm oil futures climbed more than 3% on Wednesday to their highest in nearly seven weeks, as fears of higher Indian import taxes and heavy rains hurting production fuelled buying.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 129 ringgit, or 3.22%, to 4,140 ringgit ($877.30) a tonne. Palm rose for a fourth consecutive session, hitting its highest since Sept. 1.
“The market was supported this week by a potential higher Indian import tax leading consumers to cover some requirements,” said Marcello Cultrera, director at commodities consultancy Apricus 8 Pte Ltd in Kuala Lumpur.
India is examining whether there is a need to raise palm oil import taxes, government and trade sources said, as part of efforts by the world’s biggest vegetable oil importer to help millions of its farmers reeling from lower oilseed prices.
Palm oil prices were also supported by rainstorms curbing production and disrupting logistics in East Malaysia and Indonesia’s Central Kalimanta, Cultrera said.
Palm jumps to highest close in almost seven weeks
Flooding and forecasts of heavy rains in parts of Indonesia and Malaysia have stoked worries about disruption to harvesting activities and hurting supply in the world’s largest producers. Dalian’s most-active soyoil contract rose 0.7%, while its palm oil contract gained 3.7%.
Soyoil prices on the Chicago Board of Trade extended a 1.9% overnight gain. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil faces a resistance at 4,071 ringgit per tonne. It may hover below this level or retrace towards a support zone of 3,924 ringgit to 3,958 ringgit, Reuters technical analyst Wang Tao said.
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