KUALA LUMPUR, June 18: Malaysian crude palm oil futures closed 2.2 per cent higher on Monday, boosted by Indonesia’s decision to raise export taxes on palm oil and its products.

Dealers said the export tax would have little impact on demand from the world's top buyers China and India but would fuel palm oil prices, which are 12 per cent off a historic high of 2,764 ringgit.

The benchmark September contract on the Bursa Malaysian Derivatives Exchange settled up 54 ringgit or 2.2 per cent at 2,457 ringgit ($718) a ton after hitting a high of 2,500 ringgit.

The Jakarta news is timely as it will reverse the technical downside for a short while,” said a Malaysian trader. Players will be taking full advantage of this bit of bullish news. Other traded months rose between 30 and 56 ringgit. Overall trade doubled to 20,900 lots of 25 tons each.

September palm oil on Singapore’s Joint Asian Derivatives Exchange was up $17.00 at $723.00 a ton in thin trade.

Indonesia raised export tax on crude palm oil to 6.5 per cent from 1.5 per cent while the tariff on crude olein was increased to 6.5 per cent from 0.3 per cent.

This will have a very, very marginal impact on volumes, said Atul Chaturvedi, president of Adani Exports. Though the cost of imports will go up. He said some purchases could be deferred.

However, the increase in export tax will raise palm oil prices across the board and most Malaysian palm oil companies should stand to gain from this, he said.

Many Malaysian planters, unable to find opportunities to expand at home, have invested heavily in plantation lands in Indonesia.

In Malaysia's physical market, crude palm oil for June shipment in the southern region was quoted at 2,620/2,650 ringgit a ton. Trades were done between 2,610 and 2,650 ringgit.—Reuters