KUALA LUMPUR, Nov 6: Malaysian crude palm oil futures closed higher on Wednesday after rebounding from early losses on news Indonesia may raise palm oil tax to curb exports.

Indonesia, the world’s second largest palm oil producer after Malaysia, said on Wednesday it might increase export taxes on palm oil if exports keep rising ahead of the Muslim Eid al-Fitr festivities and the year-end.

Traders said exports out of main ports of Belawan and Dumai in Sumatra have doubled in the past two months to 400,000 tons per month, prompted by rising world prices and good overseas demand, mainly from India.

If our exporters refuse to slow down their exports and improve supplies to the domestic market, we may intervene by raising export taxes, Indonesian Trade and Industry Minister Rini Suwandi told reporters.

A trader in Kuala Lumpur said: It will be good news for Malaysia if Indonesia does raise the export tax. We are already enjoying good exports.

Losses in Chicago soyaoil futures had initially weighed on the market.

The benchmark January futures contract ended up 12 ringgit at 1,565 ringgit ($411.84) a ton after trading as low as 1,541.

Traders pegged immediate resistance at 1,585 ringgit. Major support is seen at 1,500.

Overall volume was heavy at 4,487 lots although lower than Tuesday’s 5,457 lots.

The latest crop report from private forecaster Ivan Wong was little changed from his earlier estimates and had no impact on the market.

Wong estimated Malaysia’s palm oil output in October at 1.21 million tons, down 2.5 per cent from September.

He put end-Octber stocks at 1.23 million tons, up from the official 1.15 million tons at end-September.

Exports in October were estimated at 1.01 million tons, compared with the official 1.07 million tons in September.

Traders said the outlook remains bullish due to tight supplies of vegetable oils and strong demand.

Thomas Mielke, editor of Hamburg-based newsletter Oil World, said on Monday that in the next few months palm oil prices may reach 1,800 ringgit a ton a level unseen since February 1999.

Prospects of falling local palm oil production in coming months are also likely to underpin the market.

Wong forecast palm oil output to fall to 1.1 million tons in November and to 980,000 tons in December.

Chicago Board of Trade soyaoil futures closed down 0.22 to 0.32 cent per lb on Tuesday, with December down 0.30 cent at 22.06 cents and January down 0.32 cent at 22.05.

Unwinding of soyoil/soyameal spreads supported soyameal and pressured soyoil, traders said.

On the physical market, crude palm oil for November saw bids at 1,565 ringgit a tonne against sellers’ offers of 1,570 ringgit for southern and central regions. Trades were reported at 1,555 to 1,565 ringgit for south and at 1,560 for central. December CPO was bid/offered at 1,565/1,575 ringgit a ton for southern and central regions. No deals were reported.—Reuters