Palm climbs 3% to 2-month top on Indian demand, lower export tax
Malaysian palm oil futures climbed over 3% on Friday, posting a fifth consecutive weekly gain, buoyed by strong demand from top buyer India and a cut in domestic export tax reference price.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed up 134 ringgit, or 3.25%, to 4,255 ringgit ($1,007.10) a tonne, its highest closing since May 19.
Palm advanced 2.9% this week, its longest weekly gaining streak since mid-June last year.
Malaysia maintained its August export tax for crude palm oil at 8% and lowered its reference price, according to the Malaysian Palm Oil Board.
“We have seen the Indian palm demand more focused on Indonesia recently on higher supply levels and improved discounts,” said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
Indonesia crude palm oil prices, which were two weeks ago at levels similar to those in Malaysia, are now at a $30 discount, Cultrera said, adding that production in the world’s largest producer was also improving.
A labour shortage and coronavirus restrictions are clouding the palm oil production outlook in No. 2 producer Malaysia, dimming hopes of a large rise in output in the seasonal peak months during the third quarter of the year.
Dalian’s most-active soyoil contract DBYcv1 gained 1%, while its palm oil contract DCPcv1 rose 3%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.4%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Reuters (Reporting by Mei Mei Chu; editing by Subhranshu Sahu and Rashmi Aich)