JAKARTA: Malaysian palm oil futures rose on Tuesday, tracking stronger Dalian’s edible oil market and India’s reduction in basic import tax on crude edible oils.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 89 ringgit, or 2.29%, to 3,967 ringgit ($934.07) a metric ton by the midday break.
“Palm oil futures are drawing strength from the Chinese edible oil market and supported by improved demand prospects after India, the world’s largest palm oil importer, announced a reduction in import duties on crude edible oils,” said Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova.
India halved the basic import tax on crude edible oils to 10% on Friday, as it tries to bring down food prices and help the local refining industry.
Additionally, a recent uptick in crude oil prices has enhanced palm’s appeal as a biofuel feedstock, contributing to bullish sentiment, Lim said.
Dalian’s most-active soyoil contract rose 0.52%, while its palm oil contract gained 1.53%. Soyoil prices on the Chicago Board of Trade were up 0.3%.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Indonesia Jan-April palm oil exports at 6.41m metric tons
Independent inspection company AmSpec Agri Malaysia said exports of Malaysian palm oil products for May rose 13.2%, while according to cargo surveyor Intertek Testing Services it rose 17.9%.
Indonesia exported 6.41 million metric tons of crude and refined palm oil in the January to April period, down 5.37% on a yearly basis, data from the statistics bureau showed on Monday.
Oil prices ticked up on concerns about supply, with Iran set to reject a U.S. nuclear deal proposal that would be key to easing sanctions on the major oil producer, while weakness in the dollar also supported prices.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Palm oil looks neutral in a narrow range of 3,860 ringgit to 3,886 ringgit per metric ton, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
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