By Mei Mei Chu
KUALA LUMPUR, Jan 17 (Reuters) – Malaysian palm oil futures rebounded from early losses on Monday after top producer Indonesia moved ahead with plans to test biofuel with higher palm content, but a tumble in exports for the first half of January weighed on the market.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 48 ringgit, or 0.97%, to 5,004 ringgit ($1,196.70) a tonne by the midday break, yet it was at its lowest level since Jan. 11.
Indonesia’s energy ministry plans to begin road tests for a biodiesel programme using 40% palm based bio-content (B40) in February, a senior government official said.
“This news has supported the bullish sentiments in palm oil with a lot of rumours suggesting Indonesia may restrict crude palm oil export,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“On the other hand, there are the rumours suggesting India may cut crude palm oil import duties, which is once again supporting palm oil prices at the origins,” Bagani said.
Exports from Malaysia, the world’s second-largest palm oil producer, fell between 32% and 45% during Jan. 1-15 from a month earlier, cargo surveyors said on Saturday.
Malaysia kept its February export tax for crude palm oil at 8% but lowered the reference price to 4,907.14 ringgit ($1,172.55) from 5,302.01 ringgit in January.
Dalian’s most-active soyoil contract DBYcv1 rose 0.6%, while its palm oil contract DCPcv1 gained 0.7%. The Chicago Board of Trade BOcv1 was closed for a public holiday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Bursa Malaysia will be closed on Tuesday for a public holiday.
Palm oil may drop to 4,865 ringgit per tonne due to the completion of a five-wave cycle from 4,291 ringgit.
($1 = 4.1815 ringgit)
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(Reporting by Mei Mei Chu; editing by Uttaresh.V and Aditya Soni)
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