Malaysian palm oil futures ended higher on Monday after touching their lowest level this month, lifted by strong exports in the No.2 grower, but a delay to export levies in the world's top producer Indonesia mounted some pressure onto the contract.
Cargo surveyor Intertek Testing Services (ITS) reported exports of Malaysian palm oil products for May 1-25 rose 52.9% to 1,382,782 tonnes from 904,112 tonnes shipped during April 1-25. Shipments of crude palm oil surged to 528,143 tonnes during the period, from 58,500 tonnes a month ago.
"Prices recovered in the afternoon on the back of very good export numbers," said a trader with a foreign commodities brokerage in Kuala Lumpur.
But palm will likely remain rangebound between RM2,100 and RM2,170 as weak comparative markets dampen sentiment, the trader added.
"Local sentiment for export is very good but overseas the Dalian and other edible oil markets are weak."
The benchmark August contract on the Bursa Malaysia Derivatives exchange had edged up 0.3% to RM2,141 (US$592.50) a tonne by Monday's close. It earlier touched RM2,121, its lowest level since April 30.
Total traded volume stood at 35,654 lots of 25 tonnes each, above the average 35,000 lots.
A delay to the implementation of a levy by the world's No.1 producer Indonesia also turned investors uncertain.
"The delayed levy is creating lots of uncertainty, which equals delay in buying," said second palm trader in Malaysia.
"Stiff competition from Indonesia is the reason behind the lower prices."
Indonesia's finance minister said the regulation, which will force exporters in Indonesia to pay a levy of US$50 per tonne on shipments of crude palm oil and US$30 for processed palm oil, could only come in two weeks after public body that will collect the palm levy is ready.
The Indonesian Palm Oil Association on Friday told Reuters that delays in establishing guidelines and a new biodiesel fund or agency meant the implementation date would be pushed back as far as August, from earlier announcements that the levy would be introduced in the fourth week of May.
In other markets, crude oil futures dipped below US$65 a barrel as the dollar strengthened on Monday, with a public holiday in the United States and much of Europe keeping oil trading volumes muted.
Palm traders are also keeping a watch on the US soy crop progress – bigger supplies of the oilseed for crushing into rival soyoil could water down demand for the tropical oil.
Warmer temperatures have been forecast in the coming days in the US Midwest crop belt which are seen as favourable for developing corn and soybean plants.
The most active September soybean oil contract on the Dalian Commodity Exchange was down 0.8% in late Asian trade.
The US July soy markets were closed for the US Memorial Day holiday. – Reuters, May 25, 2015.
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