Palm oil hits 3-week low, rival oils also fall as India considers 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.

By midday, the benchmark palm oil contract on Bursa Derivatives exchange for November delivery was down 46 Ringgit or 1.18% at 3,855 Ringgit ($890.09) per metric ton.

The market is buzzing about a possible increase in import duties for India. "People are expecting the increase on all edible oil soon, which could impact palm oil prices more," said a Mumbai trader.

Two government sources said last month that India is considering increasing import taxes on vegetable oil to protect farmers who are struggling with lower prices of oilseeds.

Dalian's palm oil contract dropped 0.28%, while the most active soyoil contract dropped 0.44%. Chicago Board of Trade Soyoil rose 0.05%.

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.

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. Reporting by Rajendra Jhadhav, Editing by Sumana Nady and Eileen Soreng.

(source: Reuters)