KUALA LUMPUR: Malaysian palm oil futures closed at a record high on Monday, as expectations for higher demand from India grew after the world’s top edible oil buyer cut import tax.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange ended up 99 ringgit, or 1.78%, at 5,672 ringgit ($1,354.02) a tonne.

India on Sunday reduced its crude palm oil (CPO) import tax, known as the Agriculture Infrastructure and Development Cess (AIDC), to 5% from 7.5% to rein in local prices and help domestic refiners and consumers.

The tax reduction comes after Malaysian palm oil prices soared to record highs last week, making the vegetable oil less competitive over rival edible oils.

“It would be interesting to see if India increases palm oil buying after the reduction in CPO import duties, or continues to look after soft oils as palm oil is at a high premium, especially over sunflower oil,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

India’s palm oil imports in January plunged 29% from a year earlier, as refiners stepped up buying of soyoil and sunflower oil, a trade body said.

Additionally, the conflict between Russia and the West over Ukraine is threatening the supply of sunflower oil from the Black Sea region and also fuelling a rally in crude oil prices, Bagani said.

Oil prices touched their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger US and European sanctions that would disrupt exports from the world’s top producer.

In other related oils, Dalian’s May soyoil contract rose 0.7%, while its May palm oil contract gained 1.7%. May soyoil prices on the Chicago Board of Trade were down 0.1%.