KUALA LUMPUR: Malaysian palm oil futures rose for the first time in three sessions on Tuesday as the tropical oil tracked gains in comparative soy markets, but was weighed down by doubts on the effectiveness of Indonesia's levies to boost its biodiesel consumption.
The September palm oil contract on the Bursa
Malaysia Derivatives exchange inched up 1.1 percent to 2,290
ringgit ($610.83) per tonne by the day's close.
After a strong start in June which lifted the contract to
over three-month highs of 2,362 ringgit, prices are now stuck in
range-bound trade as they struggle to find a footing amid
prospects of dwindling demand and a volatile ringgit currency.
"The market is still range-bound, between 2,250 and 2,300
ringgit," said a trader with a foreign commodities brokerage in
Malaysia, adding that firmness in U.S. and Chinese soyoil
markets in early Asian trade provided some support.
Total traded volume was 38,062 lots of 25 tonnes each,
higher than the usual 35,000 lots.
Analysts say that Indonesia's new implementation date of
July 1 for its palm export levies may end the uncertainty for
exporters. However, the success of its biodiesel mandate, for
which the levies are collected, will depend on enforcement in
the top palm grower.
"Our view is that if the government can successfully utilise
the funds and enforce the 15 percent biodiesel mandate, this
would provide a major positive boost to CPO prices as it could
soak up to 5.5 million kilolitres of biodiesel," said Ivy Ng,
regional head of plantations research at CIMB Investment Bank.
But reports that only 40 percent of the levies collected
will be used to fund the biodiesel mandate could dampen
prospects of the mandate, Ng added.
"This means only $280 million biodiesel subsidy for the
industry, and we estimate that this can only cover 0.9 million
kilolitres of biodiesel a year, which is much lower than its
target."
Indonesia's crude palm oil output likely rose 4 percent to
2.774 million tonnes in May to its highest level since at least
August, a Reuters survey showed, due to a seasonally high
production month and as many plantations mature.
In vegetable oil markets, the U.S. July soyoil contract
rose 0.9 percent by 1004 GMT, while the most active
September soybean oil contract on the Dalian Commodity
Exchange gained 1.4 percent.
In other markets, U.S. crude oil prices edged up on Tuesday,
supported by warnings that a tropical storm was about to hit the
coast of the oil-producing state of Texas, while oversupply kept
Brent steady.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL5 2290 +38.00 2249 2290 973
MY PALM OIL AUG5 2292 +27.00 2258 2298 11798
MY PALM OIL SEP5 2290 +24.00 2261 2297 17883
CHINA PALM OLEIN JAN6 5204 +52.00 5106 5210 740552
CHINA SOYOIL JAN6 5920 +84.00 5790 5924 479556
CBOT SOY OIL JUL5 32.99 +3.70 32.69 33.08 8201
INDIA PALM OIL JUN5 453.90 +3.70 451.00 455.20 727
INDIA SOYOIL JUN5 609.10 +1.90 608.00 609.70 1670
NYMEX CRUDE JUL5 59.80 +0.28 59.48 60.37 30455
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.7490 ringgit)
($1 = 6.2084 Chinese yuan)
($1 = 64.23 Indian rupees)
- Reuters
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