KUALA LUMPUR: Malaysian palm oil futures ended higher on Tuesday, bouncing back after two consecutive sessions of declines, buoyed by Indonesia’s plan to hike its October reference price.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 14 ringgit, or 0.35%, to 4,009 ringgit ($963.47) a metric ton at the close.

The contract had shed 3.71% in the past two sessions.

Indonesia’s move to hike the crude palm oil (CPO) reference price by $54 to $893.64 per ton for October supported Bursa Malaysia Derivatives palm oil prices, with the market trading 50 points higher this morning, said Marcello Cultrera, a grains, oilseeds and softs broker at SSY Global.

“This adjustment has also tightened the Indonesian palm discount, narrowing from $59.5 to $28.5 by yesterday afternoon.”

Indonesia will raise its CPO reference price for October to $893.64 per ton from $839.53 in September, trade ministry official Farid Amir told Reuters. The new price will put export tax for October at $74 per ton.

Palm falls for 2nd session on stronger ringgit but logs monthly gain

The ringgit, palm’s currency of trade, weakened 0.97% against the U.S. dollar, making the commodity cheaper for buyers holding foreign currencies.

Soyoil prices on the Chicago Board of Trade fell 1.52%. Dalian’s vegetable oil markets were closed for China’s Golden Week holiday.

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

Cargo surveyors ITS and AmSpec Agri estimate exports of Malaysian palm oil products in September rose 0.8% and 1.1%, respectively.

Oil prices slid by more than 2% as a stronger supply outlook and tepid global demand growth outweighed fears around the escalating Middle East conflict and its impact on crude exports from the region.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.