KUALA LUMPUR: Malaysian palm oil futures closed higher on Friday on news of top producer Indonesia reinstating a domestic sales rule, a day after declaring it would lift a ban on exports of the edible oil.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 47 ringgit, or 0.77%, to 6,119 ringgit ($1,394.80) a tonne.

Palm had hit an intraday high of 4.17% after Indonesia said it would reimpose a domestic sales requirement to secure cooking oil supplies.

The contract dropped 3.9% for the week, in its third consecutive weekly loss.

“The palm oil market is moving wildly on news, news and news only, creating new and increased volatility,” said Sandeep Singh, director of Farm Trade, a Kuala Lumpur-based consulting and trading firm.

Malaysia, which is still reviewing a proposal to temporarily lower its export taxes, maintained its tax rate for June at 8%, but raised the reference price.

Exports from the world’s second largest producer during May 1-20 rose between 28% and 32.6% from the same week in April, cargo surveyors said.

Indonesia’s domestic rule policy is still quite restrictive, Kuala Lumpur-based independent broker Marcello Cultrera said. In the short term, palm oil prices will likely rise to 6,350-6,650 ringgit, and will reverse from 6,650 ringgit and above, he said.

The contract will likely average at 6,500 ringgit in the second quarter, and gains will be capped by rising monthly production and as importers buy hand-to-mouth, said Oscar Tjakra, a senior analyst of agribusiness research at Rabobank.

India’s June palm oil imports are unlikely to spike despite Indonesia’s decision to lift its ban on overseas shipments as a rally in palm oil prices has made rival soyoil more attractive.

Soyoil prices on the Chicago Board of Trade were up 0.9%. Dalian’s most-active soyoil contract gained 1.4%, while its palm oil contract rose 2.4%. ($1 = 4.3870 ringgit).