KUALA LUMPUR (June 23): Malaysian palm oil futures ended over 1% higher on Wednesday, lifted by signs of improving demand and strength in rival edible oils, but gains were capped by estimates of rising output.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed up 55 ringgit or 1.62% at 3,445 ringgit (US$828.32) a tonne, having risen more than 4% during the session.
The firmer sentiment comes on the back of robust demand for June shipment and inquiries for July, especially for crude palm oil and olein, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.Advertisement
“It is a demand-based rally, and it has got more legs to go up,” Paramalingam added.
But palm trimmed some of its gains, after the Malaysian Palm Oil Association (MPOA) estimated production during June 1-20 jumped 15% from the month before, traders said.
The market was also under pressure from Indonesia’s announcement on Monday that it would reduce the ceiling rate for its crude palm oil levies from US$255 to US$175 per tonne, which raised concerns about the potential loss of Malaysia’s market share.
“Though the implementation date was not announced, sources are expecting the reduction to be effective by end of the month,” Public Investment Bank said in a note.
Dalian’s most-active soyoil contract gained 2%, while its palm oil contract were up 1.5%. Soyoil prices on the Chicago Board of Trade rose 1.5%.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market.
(US$1 = 4.1590 ringgit)
Source : The Edge Markets