MARKET DEVELOPMENT
Palm Oil Rebounds on Weaker Ringgit and Petroleum Price Rally
Palm Oil Rebounds on Weaker Ringgit and Petroleum Price Rally
14.06.2022 (www.bloomberg.com) - Palm oil ended higher as a weaker Malaysian currency made the tropical oil cheaper for overseas buyers, while higher petroleum prices raised its biofuel appeal.
Futures for August delivery rose 1.1% to close at 5,857 ringgit a ton in Kuala Lumpur, after falling more than 10% in the past four sessions following top shipper Indonesia’s move to ease restrictions on palm oil exports.
“A further weakness in the ringgit and surging crude oil prices are supporting the market,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental. “Palm oil has also gained on short-covering and bargain-hunting,” he said. However, gains are expected to be capped as supplies from Indonesia are rising, he added.
Indonesia slashed the maximum crude palm oil export levy by nearly half in another step to speed up shipments and “flush out” its overflowing stockpiles, after lifting a temporary export ban on the commodity last month.
Exporters will now pay a maximum levy of $200 a ton for crude palm oil, down from $375 currently, according to a decree posted on the finance ministry’s website late Monday. The new levy is effective Tuesday and will be valid until the end of July, then raised to $240 in August.
Most of the uncertainties related to Indonesia’s exports have now been cleared, said Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. Market participants are now waiting for June production and export numbers, as well as watching palm oil’s narrowing spread to gasoil, for signals about the market’s direction, he said.