KUALA LUMPUR: Malaysian palm oil futures climbed more than 1% on Monday, as top producer Indonesia raised its export tax reference price, but expectations of higher supply capped gains.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose 52 ringgit, or 1.25%, to 4,224 ringgit ($941.60) a tonne by the midday break.
Indonesia will raise its crude palm oil reference price for September 1-15 period, effectively increasing its export tax to $124 per tonne from the current $74 per tonne, senior economic ministry official Musdhalifah Machmud told Reuters.
The world’s biggest exporter also raised its 2022 biodiesel allocation to 11.03 million kilolitres amid expectations of rising demand in the fourth quarter while it extends an export levy waiver to maintain price stability.
The higher reference price and export tax added to buying momentum, but further strength was not seen as the market is expecting higher end-stocks and improving production in both Malaysia and Indonesia, a Kuala Lumpur-based trader said.
In related oils, Dalian’s most-active soyoil contract was unchanged, while its palm oil contract fell 0.4%. Soyoil prices on the Chicago Board of Trade were down 1%.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market.
Palm is set for a short trading week, as the Malaysia bourse will be closed on Wednesday for a public holiday.
Palm oil may test a support at 4,085 ringgit per tonne, a break below may open the way towards 3,857 ringgit, Reuters technical analyst Wang Tao said.