Palm oil rises by more than 2% as Indonesia extends export curbs

02 Nov, 2023

SINGAPORE: Malaysian palm oil futures recorded their best day in three weeks on Thursday after top-producer Indonesia confirmed the extension of export controls, though a plunge in India’s edible oil imports capped gains.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange rose 92 ringgit, or 2.5%, to 3,780 ringgit ($795.79) a metric ton at closing.

“Palm oil opened the gap higher today after Indonesia announced that they are keeping the domestic market obligation (DMO) policy until 2024,” said Anilkumar Bagani, commodity research head of Suvin Group in India.

Indonesia’s Trade Ministry official Isy Karim made an official announcement on Thursday to confirm this extension.

The country imposed the DMO policy last year to control soaring prices.

Under it, producers can export only once they have sold a portion of their products in the domestic market.

India’s edible oil imports in October plunged to a 16-month low as higher stocks prompted refiners to curtail palm oil, soyoil and sunflower oil purchases, dealers told Reuters.

Lower purchases by the world’s top importer of vegetable oils could push up palm oil stockpiles in key producers Indonesia and Malaysia.

Crude oil gained 1% on Thursday to snap a three-day decline, after the US Federal Reserve kept benchmark interest rates on hold.

Malaysian palm oil futures ease

Stronger crude makes palm a more attractive option for biodiesel feedstock.

Dalian’s most-active soyoil contract rose 2%, while its palm oil contract was up 2.9%.

Soyoil prices on the Chicago Board of Trade climbed 1% after hitting a five-month low in the previous session.

Palm oil is affected by 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, strengthened 0.4% and was set for its best day since July 31.

Read Comments