Palm oil drops 3 percent as India raises import tax on edible oils

Malaysian palm oil futures fell to their lowest in three months on Monday evening as sentiment took a hit from India's move to raise import tax on edible oils to its highest in over a decade. India, the world's largest importer of edible oils, said it would raise import tax on crude palm oil to 30 percent from 15 percent and increase import tax on refined palm oil imports to 40 percent from 25 percent.
Weaker export data from a cargo surveyor and a stronger ringgit, palm's currency of trade, also weighed on the market, traders said. Gains in the ringgit usually make the edible oil more expensive for foreign buyers. The ringgit rose to 4.1470 against the dollar on Monday evening, its strongest level for more than a year. It was last up 0.3 percent at 4.1480 per dollar at the close of trade.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange dropped 3.2 percent to 2,628 ringgit ($633.56) a tonne by the end of the trading day, its sharpest daily drop since mid-February. It earlier touched 2,626 ringgit, the weakest price since Aug. 16.
Traded volume stood at 54,764 lots of 25 tonnes each. "The market reacted largely to India's import tax hike, which is quite steep, and then the ringgit also caused a downside," one Kuala Lumpur trader said. Palm oil shipments from Malaysia for Nov. 1-20 fell 6.2 percent compared with the same period last month, according to data from cargo surveyor Intertek Testing Services before the market's midday break.
Another cargo surveyor, Societe Generale de Surveillance, reported in the evening that exports for the same period fell 8.8 percent. In related edible oils, the December soyabean oil contract on the Chicago Board of Trade was down as much as 1.6 percent, while the January soyabean oil contract on the Dalian Commodity Exchange fell by up to 1.1 percent. The January palm olein contract slid 1 percent. Palm oil prices are affected by movements in other edible oils competing for a share of the global vegetable oils market.