January 17, 2013
Malaysian palm oil futures rose to their highest in over a week on Wednesday on investor optimism a zero-duty tax structure will spur exports from the world’s No 2 producer and help boost global demand for the tropical oil. The positive sentiment was also buoyed by seasonally slowing production which could help curb stockpiles that hit a new record of 2.63 million tonnes in December.
The Malaysian government announced on Tuesday that it will retain its crude palm oil export tax at zero percent for February, the same as January, in an effort to give a competitive edge over top producer and biggest rival Indonesia. “Indonesia’s crude palm oil is now pricier than Malaysian crude palm oil. So Malaysian exports will definitely pick up,” said a trader with a foreign commodities brokerage.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange closed 0.5 percent higher at 2,428 ringgit ($804) per tonne. Prices had earlier touched 2,444 ringgit, the highest level seen since January 7. Total traded volume stood at 35,249 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technical analysis showed that Malaysian palm oil may test a resistance of 2,449 ringgit per tonne, a break above which will lead to a further gain to 2,522 ringgit, said Reuters market analyst Wang Tao. Weaker winter demand from Europe and China had taken a toll on palm oil exports, causing shipments to fall more than 20 percent in the first 15 days of January. Palm oil tends to solidify in cold temperatures. But with warmer weather on its way, traders expect demand to pick up in the next few weeks. US soyaoil for March delivery rose 0.2 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange edged up 0.4 percent.