JAKARTA: Malaysian palm oil futures closed higher 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 56 ringgit, or 1.44%, to 3,934 ringgit ($927.83) a metric ton at the close.
“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.
India’s palm oil imports in May surged to a six-month high, as lower inventories and the tropical oil’s discount to rival soyoil and sunflower oil prompted refiners to increase purchases, according to five dealers.
Dalian’s most-active soyoil contract rose 0.39%, while its palm oil contract gained 1.24%. Soyoil prices on the Chicago Board of Trade were down 0.37%. Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market. 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 Tuesday, supported by rising geopolitical tensions, as Russia and Ukraine ramped up the war and Iran was set to reject a US nuclear deal proposal that would be key to easing sanctions on the major oil producer.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.