Palm oil prices continue to fall due to a possible increase in import taxes from India and concerns about demand.
The price of Malaysian palm oils futures fell for the third day in a row on Thursday due to concerns about demand amid the prospect of increased import taxes from India, the largest buyer of vegetable oil.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for November delivery fell 11 ringgit or 0.28% to 3,909 Ringgit ($904.23) per metric ton.
Lingam Supramaniam of Selangor's brokerage Pelindung Bestari said that palm oil prices have been trending downward due to a possible tax rate increase in India, concerns about demand amid the equally competitive prices for other competing oils and the strength of the ringgit.
Two government sources told reporters on Wednesday that India may increase import taxes on vegetable oil to protect farmers from falling prices of oilseeds.
The announcement of the move is expected to take place in the next few weeks. It could reduce demand for palm oil and decrease overseas purchases.
Data from Intertek Testing Services, a cargo surveyor, and AmSpec Agri Malaysia, an independent inspection company, showed that Malaysian palm oil exports between Aug.1-25 fell between 14.1% to 14.9% compared with a month ago, but the export pace increased from a drop of 16.7% in August 1-20 to 18.4%, earlier this week.
Dalian's palm oil contract, which is the most active contract in Dalian, lost 0.7%. Soyoil prices at the Chicago Board of Trade rose 0.69%.
As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.
The Malaysian Ringgit, the palm oil's trade currency, has strengthened by 0.16% in relation to the dollar. Palm oil becomes less appealing to foreign currency holders when the ringgit strengthens.
Technical analyst Wang Tao said that palm oil could fall between 3,819 and 3,864 ringgits per metric tonne, after failing to break through resistance at 3,966.
(source: Reuters)
