Malaysian crude palm oil futures closed steady on Monday, rebounding from early losses, as the market was helped by news Indonesia is expected to raise base prices of palm oil closer to average international prices.
The benchmark third-month crude palm oil contract on Bursa Malaysia Derivatives, December, ended unchanged at 1,466 ringgit ($388.96) a tonne, after trading as low as 1,452.
Overall volume was a heavy 7,751 lots of 25 tonnes each, nearly doubled Friday's 3,941 lots.
Indonesia expects to adjust base prices of crude palm oil and its by-products on October 12, a Trade Ministry official said on Monday. The base prices are used to calculate export taxes.
"The base prices should be in reference to average level of international prices at Rotterdam and Kuala Lumpur markets," said Diah Maulida, director general for international trade at the ministry.
Industry sources have said base prices for CPO may be increased to $420 from the current $160 a tonne.
"People are assuming that prices in Indonesia will become more expensive and Malaysia will benefit from that," said a trader in Kuala Lumpur. Malaysia and Indonesia are the world's two biggest palm oil producers and exporters.
Losses in rival US soyoil futures had weighed on palm oil prices earlier.
Export data for the first 10 days of October also aided the recovery.
Malaysian exports of oil palm products for October 1-10 are estimated to have risen 20.7 percent to 473,891 tonnes from the 392,742 tonnes tracked for September 1-10, Societe Generale de Surveillance, a cargo surveyor, said on Monday.
Official data released on Monday showed Malaysia's palm oil output stood at 1,431,655 tonnes in September, up 4.82 percent from August.
Palm oil stocks at the end of September totalled 1,436,436 tonnes, up 7.61 percent from end-August.
A Reuters poll of plantation houses had forecast a rise of 5.2 percent in output and a 7.9 percent increase in stocks.
In physical crude palm oil, offers for October delivery were at 1,475 ringgit a tonne against bids at 1,470 in the southern and central regions.
Trades were reported at 1,470-1,475 ringgit in the southern region.
PALM OIL FUTURES:
October (south): 1475
Open/High/Low: 1467/1472/1452
Previous close: 1475
PALM OIL PHYSICALS:
December (third month): 1466
Previous settlement: 1466
FUTURES: Benchmark December ended unchanged at 1,466 ringgit ($388.96) a tonne.
PHYSICALS: Offers for October also flat.
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