SINGAPORE: Malaysian palm oil futures were headed for a third straight day of declines on Thursday, weighed down by demand worries amid the prospect of higher import taxes in India, the world’s largest vegetable oil buyer.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange fell 11 ringgit, or 0.28%, to 3,909 ringgit ($904.23) a metric ton by the midday break.
Palm oil prices are trending down due to the possibility of a tax rate hike in India, demand worries amid equally competitive prices of other competing oils, and strength in the ringgit, said Lingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
India is considering an increase in import taxes on vegetable oils to help protect farmers reeling from lower oilseed prices, two government sources said on Wednesday.
The move, likely to be announced in the coming weeks, could dampen demand and reduce overseas purchases of palm oil.
Meanwhile, Malaysia’s palm oil product exports for Aug. 1-25 declined between 14.1% and 14.9% from a month earlier, although the pace of exports picked up from a fall of 16.7% to 18.4% during Aug. 1-20, data from cargo surveyor Intertek Testing Services and independent inspection company AmSpec Agri Malaysia showed earlier this week.
Palm oil dips as India import tax concerns counter weak supply outlook
Dalian’s most-active soyoil contract ticked 0.03% higher, while its palm oil contract lost 0.7%. However, soyoil prices on the Chicago Board of Trade gained 0.69%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.16% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.
Palm oil may fall into a range of 3,819 ringgit to 3,864 ringgit per metric ton, following its failure to break resistance at 3,966 ringgit and a falling trendline, said Reuters technical analyst Wang Tao.
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