KUALA LUMPUR: Malaysian palm oil futures surged over 2 per cent on the first trading session of 2020, surpassing rival soybean oil on the Chicago Board of Trade on higher imports from India due to a tax cut amid expectations of lower December inventories.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up at 74 ringgit, or 2.4pc, at 3,126 ringgit ($765.24), reversing a 2.4pc drop in the previous session on year-end profit-taking. It had peaked to a new near three-year high of 3,144 ringgit earlier in the session, the highest since Jan. 25, 2017. The Chicago Board of Trade was closed for the New Year holiday, but last traded at 3,109 ringgit on Tuesday.

“As production has not recovered much, buying momentum is still there. Buyers are betting on lower end-stock for December,” said a Kuala Lumpur-based trader.

India on Tuesday slashed its import taxes on crude and refined palm oil from Southeast Asian countries, a move that is expected to lead to higher imports by the world’s largest edible oil buyer.

The duty on crude palm oil was lowered to 37.5pc from 40pc, while a tax on the refined variety saw a larger cut to 45pc from 50pc. The narrower duty differential between crude palm oil and refined palm oil would see higher demand of the latter, which could dampen crude palm oil’s rally for the near term, the trader said.

Published in Dawn, January 3rd, 2020