Palm oil hits a three-week low, as other oils fall and India considers a duty hike

Malaysian palm futures fell to their lowest level for three weeks on Thursday, as a result of the expectation that India will increase import duties and due to the weakness in palm and soyoil contracts on Dalian's market.

The benchmark palm-oil contract for delivery in November on the Bursa Derivatives Market fell 53 ringgit (1.36%) to 3,848 Ringgit ($888.07).

The market is buzzing about rumours of an increase in import duties in India. "People are expecting a hike in all edible oils, which will have an impact on palm oil price," said a Mumbai trader.

Two government sources said last month that India may increase import taxes on vegetable oil to protect farmers from falling prices of oilseeds.

A leading trade group said that India's imports of palm oil in August were down more than 25% from the previous month. This was primarily due to sufficient stocks at home and low margins, which discouraged refiners for buying more.

Dalian's palm oil contract dropped 0.28%, while the most active soyoil contract fell by 0.44%. Chicago Board of Trade Soyoil fell 0.25%.

As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.

Anilkumar bagani, research director of Mumbai's Sunvin Group, says that palm oil is losing its competitiveness due to the falling prices of soyoil.

Bagani stated that the market was waiting for a revision to Indonesian palm oil export taxes.

Indonesia, which is the world's largest palm oil exporter plans to reduce export duties in order to increase competitiveness and farmers' income.

Malaysian palm oil stocks reached a six-month-high in August as production monthly hit a nine-year-high amid a slowdown of exports.

The cargo surveyor reported on Tuesday that exports of Malaysian products containing palm oil for the period Sept. 1-10 were down 4.6%, to 448.985 metric tonnes from a year ago.

According to Wang Tao, a technical analyst, palm oil is set to fall from its current support level of 3,856 Ringgit per metric tonne to the range 3,782-3,796 Ringgit. $1 = 4.3330 Ringgit (Reporting and editing by Sumana Nady and Eileen Soreng).

(source: Reuters)