Palm oil on track for weekly rise on softer ringgit; eyes on global tax rates

SINGAPORE: Malaysian palm oil futures rose on Friday and were headed for a second weekly gain, lifted by an easing ringgit, while traders awaited announcements about export and import taxes from Indonesia and India.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose 45 ringgit, or 1.14%, to 3,985 ringgit ($924.17) a metric ton as of 0310 GMT.

Palm oil extends fall on likely India import tax hike, demand concerns

The contract has gained 3.05% so far this week, and 2.0% for the month.

Fundamentals

• The meteorological department of Malaysia, the world’s second-largest palm oil producer, forecast thunderstorms from Aug. 30-Sep. 5.

• Top producer Indonesia is due to set its palm oil reference price and export tax and levy for September by the end of the month.

• Traders are also trading cautiously as key importer India is mulling an increase to import tax on vegetable oils, which could hit demand for palm oil.

• Dalian’s most-active soyoil contract climbed 1.7%, while its palm oil contract was up 1.2%. Soyoil prices on the Chicago Board of Trade rose 0.88%.

• Palm oil tracks price movements in related oils as they compete for a share in the global vegetable oils market.

• The Malaysian ringgit, palm’s currency of trade, weakened 0.15% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.

• Oil prices were steady in early trading on Friday after settling more than $1 higher on Thursday, as investors weighed supply concerns in the Middle East against signs of weakened demand.

• Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.