SINGAPORE (Sept 5): Malaysian palm oil eased on Friday from a one-week high hit earlier in the day, but posted its first weekly gain in five as the government's move to exempt the commodity from export taxes buoyed expectations of a recovery in exports.
Palm oil futures added more than 5 percent this week, the most since November, with a strong rally on Thursday after Malaysia exempted crude palm oil (CPO) from export taxes in September and October.
"Malaysian planters are hoping to boost exports after tax exemption and take some of the market share from Indonesia," said a Kuala Lumpur-based trader. "Refiners are also actively buying CPO because they fear that they might not get supplies if producers start exporting CPO directly."
The benchmark November contract on the Bursa Malaysia Derivatives Exchange finished down 2 ringgit at 2,028 ringgit ($637) per tonne, after hitting 2,041 ringgit, its highest since Aug. 27, earlier in the session.
Traded volume stood at 62,494 lots of 25 tonnes each, almost double the daily average of 35,000 lots.
The exemption from export duties, which had been set at 4.5 percent for September, is expected to increase palm oil exports by 600,000 tonnes over the two months and reduce stock levels to 1.6 million tonnes by the end of the year, the nation's commodities ministry said in a statement.
Shipments of Malaysian palm oil products fell 4.8 percent from a month earlier to 1,288,117 tonnes in August, cargo surveyor Intertek Testing Services said on Tuesday, but recovered from steeper losses earlier in the month as a surge in demand from India offset weaker imports by China and Europe.
Malaysian palm oil stocks at the end of August likely jumped to their loftiest in seven months as higher output due to crop-friendly weather outstripped poor export demand, a Reuters survey showed on Thursday.
On the technical front, palm oil may retrace to 1,968 ringgit per tonne as it failed to break resistance at 2,046 ringgit, according to Reuters market analyst Wang Tao.
Resistance is at the 300 percent Fibonacci projection level of a downward wave 3 which started at the July 7 high of 2,424 ringgit. It could have triggered a correction towards the 361.8 percent projection level at 1,968 ringgit.
The U.S. soyoil contract for December edged up in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange added 0.2 percent.
In other markets, Brent crude oil steadied near $102 a barrel on Friday, heading for a third weekly drop in four as a strong dollar depressed demand, though data showing lower crude stocks in the United States kept a floor under prices.
($1 = 3.183)
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 2040 +5.00 2036 2050 17
MY PALM OIL OCT4 2037 +4.00 2007 2049 4941
MY PALM OIL NOV4 2028 -2.00 1995 2041 23223
CHINA PALM OLEIN JAN5 5230 +30.00 5204 5268 459236
CHINA SOYOIL JAN5 6030 +10.00 6006 6060 408570
CBOT SOY OIL DEC4 32.21 +0.00 32.09 32.38 3909
NYMEX CRUDE OCT4 94.94 +0.49 94.32 94.99 13215