KUALA LUMPUR: Malaysian palm oil futures closed more than 3% higher to surpass 5,000-ringgit-a-tonne-mark for the first time, after top buyer India slashed its base import tax on edible oils to zero.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange ended 160 ringgit, or 3.3%, higher at 5,015 ringgit ($1,205.82) a tonne, snapping two days of declines.

India slashed its base import tax on crude palm oil, crude soyoil and crude sunflower oil to zero from 2.5%, as the world’s biggest vegetable oil buyer tries to cool near-record price rises.

The south Asian country also reduced Agriculture Infrastructure and Development Cess (AIDC) on crude palm oil imports to 7.5% from 20%, while AIDC on crude soyoil and crude sunflower oil reduced to 5% from 20%.

India’s palm oil imports in September doubled from a year ago to a record 1.26 million tonnes as buyers increased purchases of refined palm oil ahead of festivals and to take advantage of a previous duty cut, the Solvent Extractors’ Association of India said.

Higher exports to India could keep inventories low amid expectations for Malaysia’s production to remain sluggish in the coming months as the peak production season ends with lackluster yields.

“The end-stocks are tight, arrival of crude palm oil from mills are extremely low, and there is not much improvement in October production,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Soyoil prices on the Chicago Board of Trade were up 2.3%. Dalian’s most-active soyoil contract rose 0.3%, while its palm oil contract gained 0.7%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.