The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was 0.2 percent lower at 2,713 ringgit ($650.13) a tonne at the close of trade, down for a fifth straight session. It had earlier touched its lowest since Oct. 19 at 2,709 ringgit.
KUALA LUMPUR: The stronger ringgit and a steep rise in India’s import duty on crude palm oil (CPO) have dampened the exports of Malaysian palm oil products between Nov 1 and Nov 20, 2017 by 6.25%.
Cargo surveyor Intertek Testing Services’ data showed that exports of Malaysian palm oil products during the period declined to 891,926 tonnes from 951,339 tonnes during the period.
Phillip Futures Sdn Bhd senior derivatives product specialist David Ng said the increase in India’s CPO import tax would adversely affect demand in the short term.
“However, for the mid-term period, India, with a population of 1.3 billion, still needs to import palm oil to fulfill domestic demand,” Ng told Bernama when contacted on Monday.
It was reported that India needed to import at least 15.5 million tonnes of edible oils for this year and 2018.
India imports 14.5 million tonnes of palm oil from Malaysia and Indonesia every year to cater to domestic consumption.
Ng also said the recent strengthening of the ringgit was not favouring the demand side either.
The local note opened higher against the greenback today at 4.1560/1600 from last Friday’s close of 4.1600/1630.
Against this backdrop, he said India would be buying again to accommodate the local market insufficiency in the long term.
India has doubled the import tax on crude palm oil to 30% from 15% initially, while the duty on refined palm oil has been raised to 40% from 25% earlier, as it was grappling to support its local refiners.
This is the second hike in CPO import tax in less than three months by the Indian government with hopes to boost the domestic edible oil price, as well as support its local rapeseed and soybean market.- BERNAMA
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