Palm oil prices fall on Indonesian export levies and US tariff threats

Malaysian palm futures declined on Friday, as trading resumed following a two-day Lunar New Year break. The market was weighed down by uncertainty about Indonesia's export rate and U.S. Tariff threats.

By midday, the benchmark April palm oil contract on Bursa Derivatives Exchange fell 19 ringgit or 0.44% to 4,260 Ringgit ($963.36) per metric ton. The contract is up 1% this week, after last week's 0.62% increase.

Paramalingam Supramaniam of Selangor's brokerage Pelindung Bestari said that the possibility of a reduction of 9% to 10% in Indonesian crude oil export levies, and President Donald Trump’s threat of tariffs against Canada and Mexico, have created market uncertainty.

Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, expressed concern over the China holiday, as well as the weaker Malaysian exports of palm oil.

Bagani stated that the market now awaits data on palm oil production and export from Malaysia for January.

Later in the day, cargo surveyors will release estimates of Malaysian palm oil imports for January.

Oil prices rose after markets assessed Trump's threat to impose tariffs on Mexico, Canada and the United States this weekend.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Chicago Board of Trade soyoil prices were up by 1.22%. Dalian Commodity Exchange will be closed for Lunar New Year from January 28 to February 4 due to the holidays.

As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.

The palm ringgit's trade currency, the dollar, fell by 0.77%, making the commodity more affordable for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil could test resistance at 4,315 Ringgit per metric tonne. A break above this level would open the door to a range of 4,364 to 4,425 Ringgit.

(source: Reuters)