BEIJING: Malaysian palm oil futures gave up early gains on Tuesday, ending a five-day rally amid concerns around India’s annual budget although support from strong July exports capped losses.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 18 ringgit, or 0.45%, to 3,967 ringgit ($849.65) a metric ton.
It had gained 0.8% during early trade. The market had traded on a cautious note before India’s budget was released, as traders were worried that the government would revise import duties on vegetable oils, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
India unveiled spending of billions of dollars to create new jobs and satisfy key coalition partners in the first budget by Prime Minister Narendra Modi’s government after an election setback, aiming to win back voters and retain political support.
The budget did not announce any changes to vegetable oil tax. Exports of Malaysian palm oil products for July 1-20 jumped between 39.2% and 41.4% from the same period in June, cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia said on Saturday. Top producer Indonesia launched a trial of palm oil-based biodiesel, known as B40, on a train on Monday, news outlet CNN Indonesia quoted an energy ministry official as saying.
LSEG Agriculture Research said the benchmark palm oil futures contract may trend up towards the resistance levels of 4,000-4,020 ringgit per metric ton this week, with support at 3,840-3,860 ringgit. Oil prices were flat after a European Central Bank official hinted at a possible rate cut in September, offsetting pressure from renewed hopes of a ceasefire in the war in Gaza.
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