KUALA LUMPUR: Malaysian palm oil futures closed higher on Tuesday, driven by top importer India’s move to allow edible oil imports at a confessional duty for one more year.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 61 ringgit, or 1.61%, to 3,861 ringgit ($823.24) at closing.
India’s move to allow lower import duties on edible oils until March 2025, coupled with precariously lower production saw Malaysian palm oil prices rise, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
The lower import duty structure on crude palm oil, crude sunflower oil and crude soyoil in India, the world’s biggest importer of vegetable oil, was set to expire in March 2024.
Supramaniam said preliminary palm oil production estimates for Jan. 1-15 in Malaysia, the world’s second-largest producer, saw a double-digit fall of about 17%.
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“Thus, prices will remain resilient and extend gains, especially with lower production in Q1.”
Dalian’s most-active soyoil contract ticked up 0.48%, while its palm oil contract added 1.12%. Soyoil prices on the Chicago Board of Trade rose 0.52%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Exports of Malaysian palm oil products for Jan. 1-15 were estimated to be down 2.6% at 604,474 tons from a month earlier, independent inspection company AmSpec Agri Malaysia said on Monday.
Data from cargo surveyor Intertek Testing Services showed that exports for Jan. 1-15 rose 6.5% to 629,918 tons.
The ringgit, palm’s currency of trade, fell 0.49% against the dollar, making the commodity less expensive for buyers holding foreign currency.
Oil prices were mixed on Tuesday, after posting losses in the previous session, as broad economic concerns outweighed continued tensions in the Middle East that led to more tanker diversions.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.