KUALA LUMPUR: Malaysian palm oil futures rose to a two-week high in early trade on Tuesday, before falling back to end lower on speculation of weaker demand so far in May.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange dipped 0.1 percent to 2,381 ringgit ($603.09) a tonne at the close of trade, snapping two previous days of gains.
Trading volume stood at 50,670 lots of 25 tonnes each on Tuesday evening.
“The outlook is that exports for the first ten days of May are bad,” said a futures trader from Kuala Lumpur, explaining that May demand is forecast to slump from the previous month as Malaysia’s crude palm oil export tax is reinstated this month.
Malaysia, the world’s second-largest palm oil producer after Indonesia, set its crude palm oil export tax at 5 percent for May, after extending a duty suspension implemented at the start of 2018 until the end of April.
Malaysia first suspended its export tax on crude palm oil in early January for three months to increase demand and boost prices, as it expected stockpiles to grow in 2018.
The same trader added that the market was also squaring positions ahead of Malaysia’s national elections on Wednesday, which has been declared a public holiday. Markets will resume trading on Thursday.
Palm had earlier rose as much as 0.7 percent to 2,400 ringgit, its highest since April 26, on expectations of slowing output.
Palm oil output for April is forecast to remain flat at 1.57 million tonnes, following a surge in March when output rose to its highest level for that month since 2000, according to a Reuters poll.
In other related oils, the Chicago July soybean oil contract was down 0.3 percent, while the September soybean oil on China’s Dalian Commodity Exchange fell 0.2 percent.
The Dalian September palm oil contract was up 0.3 percent.
Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Source: Brecorder
