Malaysian palm oil futures fell more than 1 percent to the lowest level in a year and a half on Thursday evening on the prospect of Indian importers cancelling shipments after an increase to import duty last week and forecasts of higher production in March. Palm oil prices have dropped more than 5 percent since last Thursday after top edible oils importer India raised import taxes on the vegetable oil to their highest in more than a decade.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 1.4 percent at 2,410 ringgit ($616.84) a tonne at the close of trade. It earlier fell to 2,408 ringgit, its lowest since August 5, 2016. Trading volumes stood at 45,981 lots of 25 tonnes each on Thursday evening.
"The market is down on the back of cancelled shipments from India. The market is awaiting export figures; India demand will be crucial," one Kuala Lumpur-based futures trader said. Indian importers are seeking to cancel up to 100,000 tonnes of crude palm oil cargoes after costs were boosted by the higher duty, three trade sources told Reuters, adding that April imports were likely to be substantially lower.
Overall 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. "There are expectations of rising production (in March). Some preliminary figures already suggest that," the Kuala Lumpur trader said.
Meanwhile, February production is seen declining by 12 percent to 1.4 million tonnes, with stocks seen down 6.9 percent at 2.37 million tonnes. In related oils, the Chicago Board of Trade's May soyabean oil contract was down 0.5 percent while the May soyabean oil on China's Dalian Commodity Exchange fell 1.1 percent. The Dalian May palm oil contract was down 2.1 percent.
Palm oil prices are affected by movements in rival edible oils competing for a share in the global vegetable oils market. Palm oil may fall to 2,418 ringgit a tonne, having broken a support at 2,448 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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