JAKARTA, Oct 13: Malaysian palm oil futures closed 3.5 per cent higher on Monday on a rebound, after hitting a 23-month low on Friday, supported by crude oil price rise, some traders said.

A Malaysian government move to raise the annual export quota for crude palm oil by 50 per cent, in an attempt to ease surging inventory that has hurt prices, lent some support to the market, dealers said.

The benchmark December contract on the Bursa Malaysia Derivatives Exchange rose 62 ringgit to 1,835 ringgit ($524) a ton.

Contracts for other traded months were mostly higher.

Overall volume stood at 17,933 lots of 25 tons each.

Palm price bounced back partly because it has dropped so much relative to crude oil and soybean oil. I think the bottom is not that far off, said an analyst at a Singapore-based brokerage.

The analyst said buyers seemed to be more comfortable now to uy as they may think that there is not much potential for prices to go down further.

Malaysia, the world’s second-largest producer of palm oil, will raise its annual export quota for crude palm oil to 3 million tons from 2 million tons as part of the government’s efforts to help reduce growing palm oil stocks, Commodities Minister Peter Chin said on Monday.

Chin said the government also hopes to push for a biofuel mandate to require the replacement of 5pc of domestic diesel consumption with palm-based biofuel.

In the physical market, crude palm oil for October delivery stood at 1,850/1,860 in south region and region. Trades were done at 1,820-1,850 ringgit a ton in south region and 1,800-1,850 ringgit a ton in central region.

In neighbouring Indonesia, the world’s largest palm oil producer, there were no physical trades at the state marketing centre in Jakarta, as well as in Medan, North Sumatra, on Monday.

The state marketing centre said it failed to sell palm oil due to low bids.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- did not hold an auction today.

Let’s hope when we have auction on Tuesday, the price remain stable, said a trader in Jakarta.

Meanwhile, refiners offered refined, bleached, deodorised (RBD) palm olein, which is used in cooking oil, at 5,350-5,450 per kg, down slightly from 5,500 rupiah per kg on Friday.

It was difficult to find buyers. I think people are still expecting price to drop further, said a trader in Jakarta.—Reuters