Malaysian crude palm oil futures jumped 1.8 percent on Tuesday as India reduced import tariffs on edible oil, boosting hopes that palm oil shipments to the South Asian nation would rise. The benchmark October contract on the Bursa Malaysia Derivatives Exchange finished up 45 ringgit, or 1.8 percent, at 2,525 ringgit ($743) per tonne.
"The market has reacted to the news, it is positive for the market," said one dealer. "Now the duty on crude palm oil is at par with soybean oil which means palm oil shipments will rise as it is a cheaper oil." Crude palm oil and soybean oil imports into India will attract a duty of 40 percent, while refined palmolein will have an import tariff of 52.5 percent. Other traded months rose between 10 and 46 ringgit in overall trade of 10,568 lots of 25 tonnes each. But some traders said a lot will depend on export numbers.
Exports of Malaysian palm oil products for July 1-20 fell 2.6 percent to 644,332 tonnes, from 661,626 tonnes shipped between June 1 and 20, cargo surveyor Intertek Testing Services said.
Another cargo surveyor, Societe Generale de Surveillance, said exports fell 5.5 percent to 638,163 tonnes over the same period. Industry officials earlier said palm oil demand will pick up from July, as buyers lock in supplies for a series of festivals like the Chinese mid-Autumn festival and the Muslim holy month of Ramadan, both in September.
But traders now say high prices could push consumers to delay purchases until the end of July. Cargo surveyors will announce July 1-25 export numbers on Wednesday. Palm oil is less than 9 percent off an historic high of 2,764 ringgit reached in June. October palm oil on Singapore's Joint Asian Derivatives Exchange was untraded by 1103 GMT. In the physical market, crude palm oil for July shipment in Malaysia's southern region was quoted at 2,620/2,630 ringgit a tonne. Deals were done between 2,600 and 2,625 ringgit a tonne.