KUALA LUMPUR: Malaysian palm oil futures fell as much as 3.8% on Tuesday, as Indonesia’s export levy removal and a likely delay in its B35 biodiesel programme hurt sentiment.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed down 110 ringgit, or 2.79%, to 3,835 ringgit ($862.19) a tonne, snapping a two-day rise. The contract fell after a leading analyst Dorab Mistry forecast that prices would likely continue to fall towards 3,000 ringgit a tonne, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.
“Although possible buying from India and China, a wide price spread with soy oil, and any adverse weather concerns may help support the market.” Asian buyers are ramping up palm oil purchases after prices corrected to their lowest in a year and as top producer Indonesia has scrapped levies on exports until Aug. 31.
Indonesia is also “very likely” to delay the rollout of biodiesel with 35% palm oil content, known as B35, which was previously expected to start on July 20.
Meanwhile, Malaysia has maintained its August export tax for crude palm oil at 8% and lowered its reference price, a Malaysian Palm Oil Board circular showed.
The world’s second largest producer is losing around 57,880 tonnes of palm oil fruit each day due to an acute shortage of labour, Malaysia’s commodities minister Zuraida Kamaruddin said.
Zuraida warned Malaysia’s palm oil exports to China will continue to be affected by global economic challenges and overall imports in the world’s second-largest buyer will likely decline.
Dalian’s most-active soyoil contract rose 1.2%, while its palm oil contract fell 0.03%. Soyoil prices on the Chicago Board of Trade were down 1.4%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Brecorder
