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Malaysian palm oil futures rose on Tuesday, buoyed by supply concerns over flooding on the Malaysian peninsula and higher Indonesian export taxes and levies for December.
Malaysian palm oil futures rose on Tuesday, supported by supply worries stemming from flooding on the Malaysian peninsula and higher Indonesian export taxes and levies for December, though an expected decline in November exports capped gains.
The benchmark February contract on Bursa Malaysia Derivatives climbed 32 ringgit, or 0.65%, to 4,987 ringgit ($1,116.16) per tonne by the midday break.
Supply concerns emerged as the Malaysian peninsula faced flooding that officials fear could be the worst in a decade, potentially affecting palm oil output, according to a Kuala Lumpur-based trader.
Higher export taxes and levies imposed by Indonesia, the world's largest palm oil exporter, are also supporting prices, the trader said.
Indonesia raised its December reference price for crude palm oil (CPO) to $1,071.67 per tonne, up from $961.97 in November, which pushed the export tax up to $178 per tonne compared with $124 in November.
However, a likely decline in November exports weighed on the contract and slowed momentum, the trader said.
Malaysian palm oil exports for November are expected to fall by between 9.3% and 10.4%, according to cargo surveyor estimates. "Looking ahead, prices this high are discouraging buyers in various destinations. With exports slowing, we could see stocks build up in December and January," the trader said.
The most-active soyoil contract on China's Dalian exchange fell 1.79%, while its palm oil contract gained 0.08%. Soyoil on the Chicago Board of Trade slipped 0.41%.
Palm oil tracks price movements of competing edible oils as it vies for a share of the global vegetable oils market. Palm oil is expected to retest resistance at 5,070 ringgit per tonne, and a break above this level could open the way towards the 5,128-5,206 ringgit range, according to Reuters technical analyst Wang Tao.
Source: Reuters