Malaysian palm oil futures edged into positive territory on Thursday evening, recovering losses made after the government said it would resume export tax on the tropical oil after a three-month suspension. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was 0.1 percent up at 2,450 ringgit ($626.28) a tonne by the end of the trading day.
Trading volumes stood at 66,363 lots of 25 tonnes each on Thursday evening. The resumption of export tax weighed on palm futures, said a futures trader in Kuala Lumpur. Malaysia set its crude palm oil export tax at 5 percent from April after a three-month suspension implemented at the start of the year, a government circular showed on Thursday.
Lower soyaoil prices and a rebound in the ringgit also kept the market weaker, the trader said. The ringgit strengthened by 0.3 percent to 3.9120 against the US dollar on Thursday evening. A stronger ringgit makes the tropical oil less attractive to buyers holding foreign currencies. In related oil, the Chicago Board of Trade's May soyabean oil contract was down 0.6 percent. May soyabean oil on China's Dalian Commodity Exchange rose 0.5 percent, while the May palm oil contract dipped by 0.2 percent.
Palm oil prices are affected by movements in rival edible oils that compete in the global vegetable oils market. The market is rangebound and will react to news, but stocks will be the deciding factor, another trader said. Traders expect the Malaysian Palm Oil Association to release the national output data this week. "Any news will swing it. The export tax for April definitely bears an impact. Likewise, the market was up yesterday on news that Indonesia won its biodiesel dispute with the European Union," the trader said.
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