Palm oil prices up over 2% as Malaysia slashes export duty, set for weekly gain

KUALA LUMPUR: Malaysian palm oil futures jumped on Friday after the world’s second-largest producer lowered its export duty on the commodity to zero for June, setting the contract to log a 2.9 per cent gain for the week.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 48 ringgit, or 2.36 per cent, to 2,079 ringgit ($478.70) per tonne by the midday break.

Top buyer India may purchase more crude palm oil following Malaysia’s decision to slash its export duty, a Singapore-based trader said.

The steep cut in export duty to 0 per cent for June, from 4.5 per cent in May, comes amid an estimated 25 per cent slump in global demand for the edible oil as the coronavirus outbreak shuttered restaurants and curbed travel around the world.

China, the world’s second-largest buyer of the vegetable oil, is also ramping up purchases after easing its coronavirus lockdown measures, traders said.

Crude oil prices rose on Friday as data showed demand for crude picking up in China, boosting hopes that a global petroleum supply overhang may start to fade.

Stronger crude oil futures makes palm a more attractive option for biodiesel feedstock.

Malaysia’s palm oil exports in May 1-15 rose 7.1 per cent from the month before, cargo surveyor Amspec Malaysia said.

Dalian’s most-active soyoil contract rose 0.79 per cent, while its palm oil contract surged 1.97 per cent. Soyoil prices on the Chicago Board of Trade were trading up 0.64 per cent.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may break a resistance at 2,043 ringgit per tonne, and rise towards 2,072 ringgit, Reuters technical analyst Wang Tao said.