KUALA LUMPUR, June 25: Malaysian crude palm oil futures closed higher on Wednesday after short-covering and news Indonesia was raising export taxes for palm products in July, traders said.

Prices of the vegetable oil fell more than 5 per cent last week but Indonesia’s move to hike up export taxes for palm oil might see more orders coming to Malaysia, pushing the market higher, they said.

By the close, the benchmark September contract on the Bursa Malaysia Derivatives Exchange rose 35 ringgit, or 1 percent, at 3,533 Malaysian ringgit ($1,083) a ton.

Overall volume was 10,884 25-ton lots, up from 7,341 lots on Tuesday.Speculators who sold down have to cover their short positions, said one trader. The market was also poised to rise after falling in the last few days.

Exports of Malaysian palm oil products for June 1-25 fell 9.4 percent to 899,327 tons from 993,093 tons shipped between May 1 and 25, cargo surveyor Intertek Testing Services said on Wednesday.

Exports of Malaysian palm oil products for June 1-25 fell 12.3 percent to 926,345 tons from 1,056,282 tons shipped between May 1 and 25, cargo surveyor Societe Generale de Surveillance said on Wednesday.

Other traded months fell between 5 ringgit and 11 ringgit, except for the October contract, which was unchanged.

Overall trade stood at 3,083 lots of 25 tons each.

The Indonesia palm oil export tax increase might just be the right thing to get the market in a mood to move higher because demand will eventually be more focused on Malaysia rather than Indonesia, another trader said.

Indonesia will raise the palm oil export taxes in July to bring them in line with international prices, a senior trade official said on Wednesday.

The government will raise the palm oil export tax to 20 per cent in July, from 15 per cent in June, while the base export price for crude palm oil will be increased to $1,144 per ton from $1,105.

The new prices will be valid from July 1 until the end of the month.

In Malaysia’s cash market, crude palm oil for June and July shipments in the southern region were quoted at 3,560/3,570 ringgit a ton. Trades were heard at 3,540-3,570 ringgit for the southern region.—Reuters