KUALA LUMPUR: Malaysian palm oil futures jumped on Tuesday to hit a near two-week, lifted by signs of buying from China and uncertainties over the resumption of Indonesian exports even after the three-week ban was lifted.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 209 ringgit, or 3.34%, to 6,470 ringgit ($1,472.13) a tonne, rising for a third consecutive day.
Indonesia, the world’s biggest palm oil producer, agreed to allow exports to resume after a three-week ban, though it is unclear how rapidly shipments will resume given accompanying rules aimed at securing domestic supply.
“We don’t see much of Indonesian palm oil export flow to resume soon due to the absence of clarity over the export license issuing,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
A senior official told a parliamentary hearing that a subsidy provided to cooking oil makers to help control retail prices will be stopped after May 31, when the government will put in place a new policy to control raw material price.
Chief economic minister Airlangga Hartarto said on Monday the government was aiming for a 20% domestic sales rule on exports of palm oil, meaning companies must provide a fifth of their supply to the local market.
A key area to watch is how the government determines the size and price of the domestic sales rule and the mechanism to improve the distribution of cooking oil to ensure sufficient supply, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Signs of demand from China also helped fuelled gains, traders said.
Dalian’s most-active soyoil contract rose 0.5%, while its palm oil contract was up 1.6%. Soyoil prices on the Chicago Board of Trade also rose 0.5%.