VEGOILS - Palm rises again for a second meeting on Indonesia's plan to raise the levy
The price of Malaysian palm oils futures increased for the second session in a row on Thursday. This was largely due to Indonesia's plans to increase?palm export levies, but pressure from rising stock expectations?limited gains.
The benchmark palm-oil contract for March delivery on the Bursa Malaysia Derivatives exchange gained 9 ringgit or 0.22% to 4,042 Ringgit ($995.57) a metric ton as of closing.
Eniya Dewi, an official from the energy ministry, told reporters that Indonesia would likely increase its palm-oil export levy in order to support biodiesel production, citing a lack of funds.
A Kuala Lumpur based trader stated that the plan was bullish for Malaysian Palm Futures. However, market participants "are still waiting to see how Indonesia will hike".
The Malaysian Palm Oil Association estimates a decline of only 4.64% in the 'December' output. This is smaller than what market participants expected, which was a drop of 9%.
Indonesia consumed 14,2 million kilolitres (or 7.6% more) of palm-based Biodiesel by 2025. This was a 7.6% rise compared to last year. The country had implemented a mandate for 40% biodiesel blends, also known as B40.
Dalian's palm oil contract gained 1.13%, but its most active soyoil contract grew by 0.2%. Chicago Board of Trade soyoil prices rose 0.43%.
Palm oil follows the price movement of rival edible oils as it competes to gain a share in the global vegetable oil?market.
On Wednesday, Indonesian President Prabowo said that his government could seize between 4 and 5 million hectares (or 12 million acres) of palm plantations in this year. This is on top of the 4.1million hectares it seized last year.
Analysts say that this combined with Indonesia's ambitious plans for biodiesel could put more upward pressure on palm oil prices globally.
Technical analyst Wang Tao believes that the price of palm oil could return to its high level of 4,102 ringgits per ton reached on December 30, driven by wave c. ($1 = 4.0600 ringgit)
(source: Reuters)
