Palm oil settles higher despite Indonesia export levy uncertainty, US tariff threats

KUALA LUMPUR: Malaysian palm oil futures reversed early losses to end higher on Friday, and logged a second consecutive weekly gain, as stronger rival Chicago soyoil and a weaker currency offset market uncertainty over Indonesia's export rates and US tariff threats.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed 11 ringgit, or 0.26 per cent, higher at 4,290 ringgit (US$964.04) a metric ton. The contract gained 1.76 per cent this week after a 0.62 per cent rise last week.

The possibility of a 9 per cent to 10 per cent reduction in Indonesian crude palm oil export levies and US President Donald Trump's threat of tariffs on Canada and Mexico have caused market uncertainty, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

China holiday and weaker Malaysian palm oil exports, coupled with a production recovery last month, provided further concerns, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin group.

The market is now awaiting Malaysian palm oil export and production data for January, Bagani said.

Exports of Malaysian palm oil products for January are estimated to have fallen between 12.3 per cent and 20.1 per cent from a month ago, according to cargo surveyors Intertek Testing Services and independent inspection company AmSpec Agri Malaysia.

Soyoil prices on the Chicago Board of Trade were up 1.29 per cent. The Dalian Commodity Exchange is closed from Jan 28 to Feb 4 for the Lunar New Year holidays.

Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

The ringgit, palm's currency of trade, weakened 1.41 per cent against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Oil prices were steady on Friday but on course for a weekly decline as markets wait to see if US president Donald Trump follows through on his threat to impose tariffs on Mexico and Canada this weekend.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. (US$1 = 4.4500 ringgit)