Indonesia raises benchmark palm oil prices to two-month high

(The Edge Filepix by Suhaimi Yusuf)

(The Edge Filepix by Suhaimi Yusuf)

A +A

(Nov 1): Palm oil closed at the highest level in more than two months after top producer Indonesia extended an export duty waiver for the crude variety, but raised the reference price.

Indonesia will continue the exemption until the end of the year, if the reference price, which is used to determine the tax, remains below US$800 per tonne. The government raised the price of the crude grade by nearly 8% to US$770.88 a tonne in the first half of November.

“Malaysian crude palm oil will now be more attractive,” said Paramalingam Supramaniam, director of Selangor-based broker Pelindung Bestari Bhd. “However, demand for refined palm oil products will decrease due to cheaper alternatives from Indonesia.”

Palm oil markets also tracked a rally in Chinese markets, along with edible oil futures, on speculation that policymakers are slowly preparing to exit the strict Covid zero policy that has been the biggest bugbear for investors. On the Dalian Commodity Exchange, refined palm oil rose 4.5% in January, while soybean oil rose 2.8%.

Palm, the world’s most consumed cooking oil, could also benefit from rising tensions in the Black Sea region as supply disruptions in sunflower oil could boost demand for the tropical oil. Benchmark palm oil futures in Kuala Lumpur rose more than 5% to RM4,262 a tonne, on track for the highest close since late August.

Demand in the final months of this year may slow due to winter in the Northern Hemisphere, Parmalingam said. Palm oil tends to harden at cold temperatures.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button