KUALA LUMPUR: Malaysian palm oil futures posted their biggest jump in nearly three months on Monday, tracking gains in rival soyoil, although Indonesia’s move to lift its export levy weighed on sentiment.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange jumped 208 ringgit, or 5.73%, to 3,837 ringgit ($862.44) a tonne by the midday break, its highest daily gain since April 27.
Indonesia has scrapped its export levy for all palm oil products until Aug. 31 in a fresh attempt to boost exports and ease high inventories, finance ministry officials said on Saturday, adding that the move would not disrupt government revenues.
Indonesia removes palm oil export levy until Aug. 31
The world’s biggest producer will have to export 6 million tonnes of palm oil until August if it wants to cut its ballooning inventory levels back to normal, the Indonesian Palm Oil Association (GAPKI) said.
“The announcement did not come as a surprise as the government has indicated its plans to cut the levy since July 6 and is part of a series of measures taken by the government to clear the current high palm oil stocks,” Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
The market has factored in the levy removal, and strong Chicago soyoil prices due to weather concerns and short covering lifted prices of palm oil, a Kuala Lumpur-based trader said. Soyoil contract on the Chicago Board of Trade gained 1.4%, extending a 4% climb on Friday.
Dalian’s most-active soyoil contract gained 3.7%, while its palm oil contract rose 4.5%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retest a resistance at 3,782 ringgit per tonne, a break above which could lead to a gain into 3,900-4,090 ringgit range, Reuters technical analyst Wang Tao said.