Malaysian palm oil futures extended losses into a second day on Thursday, following competing soy markets, with investors keeping a close watch on crude prices at near four-year lows. "It's all external factors. The US bean oil was down last night, and today the Dalian fell," said a trader with a foreign commodities brokerage in Malaysia.
The US soyoil contract for December was nearly flat after falling to as low as 32.19 US cents a pound late Wednesday. The most active May soybean oil contract on the Dalian Commodities Exchange fell 1.2 percent in late Asian trade. The benchmark January contract on the Bursa Malaysia Derivatives Exchange had inched down 1.2 percent to 2,232 ringgit ($669) per tonne by the day's close, with prices trading between 2,219-2,245 ringgit.
Total traded volume stood at 39,596 lots of 25 tonnes, just above the usual 35,000 lots. Palm's support level is seen at 2,200 ringgit with a resistance of 2,300 ringgit over the next few days, the Malaysian trader said.
India's food ministry wants to double the import tax on crude edible oils from the current 2.5 percent and raise the tax on refined oils to 15 percent, but is waiting on views from other ministries before passing the recommendation to the cabinet, the food minister told Reuters on Thursday. A hike in import duties from the world's No 1 vegetable oil buyer could weigh on benchmark palm futures, as most of its edible oil imports are palm oil from top producers Indonesia and Malaysia.
Investors are also keeping a close watch on crude oil's sell-off, which could lower palm's use for biodiesel blending, although some market players say biodiesel mandates in the top producing countries will help prop up demand. "Just because crude prices drop doesn't mean biodiesel demand will stop, because there are government policies especially from Indonesia and Malaysia," the Kuala Lumpur trader said.
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