Malaysian palm oil futures ended nearly flat on Friday, reversing gains earlier in the session to hover at six-week lows, as investor uncertainty about lacklustre demand for the tropical oil dragged prices to their third straight weekly loss. Malaysian palm prices have fallen 2.8 percent this week, pulling March prices down more than 5 percent - their biggest fall since February 2013.
Market players are anticipating Malaysia's palm oil exports for March to be weaker than a month ago as major consumers trim back purchases. "The market is still expecting a lower full-month number (for March)," said a trader with a foreign commodities brokerage. Malaysia exported 1.35 million tonnes of palm oil in February, data from the Malaysian Palm Oil Board show, slightly below January's 1.37 million tonnes.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange closed at 2,653 ringgit ($811) per tonne on Friday, little changed from the previous session. Prices, however, were choppy and earlier slipped to 2,643 ringgit, their lowest since February 13, before pulling up. Total traded volume stood at 42,148 lots of 25 tonnes, above the average 35,000 lots.
Top analysts and industry officials have cautioned that India, the world's largest edible oil importer, would cut back on palm this year in favour of other cheaper edible oils. An official with Ruchi Soya Industries Ltd, one of India's biggest edible oil buyers, told Reuters that "palm imports would drop significantly to around 7.4 million tonnes from 8.17 million tonnes last year due to price spreads in favour of soft oils".
Indonesia, the world's top producer of palm oil, hiked its export tax for crude palm oil to 13.5 percent in April from 10.5 percent in March, a ministry official said. Malaysia, the No 2 producer, has set its own export duty at a more competitive 5.5 percent. In other competing vegetable oil markets, the US soyoil contract for May rose 0.6 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodities Exchange was nearly flat.
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