Palm oil higher

22 Nov, 2017

Malaysian palm oil futures rose on Tuesday, reversing a slide to its weakest since mid-August earlier in the day, after top buyer India raised its import duties on vegetable oils. India lifted the import tax on crude palm oil to 30 percent from 15 percent and increased import tax duty on refined palm oil imports to 40 percent from 25 percent.
The benchmark palm oil February contract on the Bursa Malaysia Derivatives Exchange ended at 2,635 ringgit ($636.78) a tonne, up 0.2 percent. Earlier in the day, it slid to 2,612 ringgit a tonne, its weakest since August 16. Traded volume stood at 73,347 lots of 25 tonnes each. "The market is up on profit taking now, after seeing a downside for too long," said a futures trader from Kuala Lumpur.
The trader added he expected the market to get some support from production, which has seen harvesting disruptions from year-end monsoon rains. Industry analyst Dorab Mistry said on Tuesday that Malaysian palm oil futures will likely fall a further 2-3 percent after India raised its import duties. India's edible oil imports are likely to drop to 15.5 million tonnes this year, down from an earlier estimate of 15.9 million tonnes.
"Primarily India's move is impacting prices as it is seen as a drastic step," said a Kuala Lumpur-based trader. "Secondly, production is not reducing as had been expected." Indian oilseed crushers had been struggling to compete with cheaper imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soyabeans which have been trading below government-set prices in the physical market and angering farmers.
On the technical front, the palm oil third-month contract may drop more to 2,606 ringgit per tonne as suggested by its wave pattern and a Fibonacci ratio analysis. Among other related edible oils, the most-active soyabean oil contract on the Chicago Board of Trade was unchanged, while Dalian Commodity Exchange soyabean oil ticked lower. Dalian palm olein lost 0.6 percent.

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