Malaysian palm oil futures fell as much as 1 percent on Monday, extending the slide to a third session after India raised import taxes on the tropical oil last week and a stronger ringgit weighed on prices. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 0.4 percent at 2,463 ringgit ($630.73) a tonne at the close of trade, after shedding about 3 percent on Friday. Earlier in the session, it fell to its lowest in a month to 2,449 ringgit.
Trading volumes stood at 19,789 lots of 25 tonnes each on Monday evening. "Sentiment has been weakened after India raised import duties. There is a lack of fresh supportive news to reverse it yet," said a futures trader based in Kuala Lumpur, adding investors were also cautious before an industry conference this week.
Top edible oils importer India said on Thursday it would raise import taxes on palm oil to the highest level in more than a decade. The tax hike is expected to dent its palm oil imports, while making imports of soyaoil and sunflower oil lucrative for the country's refiners, industry officials said.
"However, India would still need to buy (palm oil) if their crop is poor," said the Kuala Lumpur-based trader. Malaysian palm oil exports rose 6 percent on the month to 1.5 million tonnes in January, data from the Malaysian Palm Oil Board showed.
Exports from Malaysia are forecast to drop 11.9 percent to 1.33 million tonnes in February, according to a Reuters survey of eight traders, planters and analysts. Production in February is seen declining 12 percent to 1.4 million tonnes, while stocks are seen down 6.9 percent at 2.37 million tonnes.
Gains in the ringgit, palm's traded currency, usually make the vegetable oil more expensive for foreign buyers. The Malaysian currency had strengthened by 0.1 percent against the dollar to 3.8970 by noon. In other related oils, the Chicago Board of Trade's May soyabean oil contract was up 0.3 percent, while the May soyabean oil on China's Dalian Commodity Exchange rose 0.5 percent. The Dalian May palm oil contract was down 0.7 percent.
Palm oil prices are impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market. Palm oil may break a support at 2,464 ringgit per tonne and fall more to the next support at 2,439 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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