KUALA LUMPUR, Oct 24: Malaysian palm oil futures surrendered earlier gains to finish in negative territory on Wednesday as players booked profit ahead of the release of export data for the first 25 days of October.
The market had earlier extended its rally on expectations that the government would subsidise rising insurance costs for oils shipments.
The benchmark third-position January futures contract ended down three ringgit at 930 ringgit ($244.74) a ton after trading as high as 949. It rose 18 ringgit on Tuesday.
Market volume stood at 2,039 lots.
We have export numbers coming out tomorrow, so players are using this as an excuse to take profit, said a trader.
He said the October 1-25 exports data from cargo surveyors ITS and SGS, due on Thursday, were unlikely to surprise the market.
Malaysian Primary Industries Minister Lim Keng Yaik said on Tuesday insurance surcharges for a ton of palm oil to war-risk areas had risen $1-$5 and exporters were told of the exact difference only 48 hours before their cargo reached port.
Lim said he planned to ask Prime Minister Mahathir Mohamad’s cabinet to subsidise the higher premiums if it could, and that a decision on this was expected by next week.
Dealers said market thinking was that there would be more exports to war-risk areas in the event of a subsidy, although the fundamentals of supply and demand would still rule.
Trading in physical palm oil followed the trend set by the futures market.
Crude palm oil for October was bid/asked at 865/875 ringgit a ton for southern and central regions. Trades were reported at between 860 and 870.
November (south and central) was offered at 880 ringgit against bids at 875, and traded between 870 and 880.—Reuters
