KUALA LUMPUR, Oct 18: Malaysian crude palm oil futures fell at Tuesday’s close, surrendering gains from the morning, on the heels of a decline in rival Chicago soyaoil. Indonesia’s decision not to raise export prices for its palm products also weighed on the market, dealers said.
Indonesia is the largest palm oil exporter after Malaysia. Higher export prices for its palm products means better competitiveness for its Malaysian rival.
Indonesia said last week it might raise export prices of palm oil to ensure enough supply at home for the ongoing Muslim fasting month of Ramadhan, its biggest festival.
But the Finance Ministry in Jakarta said on Tuesday the plan had been dropped after objections from industry.
The benchmark third-month January crude palm oil contract on Bursa Malaysia Derivatives closed down 1 ringgit at 1,450 ringgit ($384.61) a ton, a ringgit shy of the day’s low.
It had risen as much 8 ringgit in the morning — touching an intraday high of 1,459 ringgit — on the back of Monday’s strong close in soyaoil.
Other traded months fell 1 to 20 ringgit.
The overall market volume totalled 4,870 lots of 25 tons each — almost double that of Monday, but still lower than the 6,000 lots seen on a typically active day.
People got out after seeing the soya prices going the other way, said a trader. The Indonesian news also had some impact.
Soyaoil and palm oil compete for exports and their prices often move in step.
Soyaoil futures on the Chicago Board of Trade rallied on Monday on projected demand for soya biodiesel. CBOT’s December soyoil closed up 0.36 cent to 24.39 cents, powering Tuesday’s early rise in palm oil.
But in subsequent electronic trade conducted on Tuesday, December soyaoil weakened as much as 0.18 cent to settle at 24.21 cents.
The physical crude palm oil market also gave up stronger prices in the morning to end virtually flat. The October contract saw offers at 1,460 ringgit and bids at 1,455, against Monday’s closing quotes of 1,460/1,452.50.
Trades closed at 1,460 to 1,455 ringgit.—Reuters