JAKARTA: Malaysian palm oil futures fell 1.7 per cent on Thursday, giving up nearly half their gains from a rally in prices in the previous session on market talk that India may exempt it from a cut in import duties, denting demand.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange extended losses and closed at 2,923 ringgit per tonne after jumping 3pc in the previous session.
“The market is adjusting after Wednesday’s euphoric recovery,” said Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil broker.
The contract rose on Wednesday after an industry body forecast a bigger than expected drop in output and on hopes that India would reduce duties on imports of the vegetable oil.
However, a Kuala Lumpur-based trader said on Thursday there were rumours that palm oil may not be included in India’s import duty cut, hurting its prices.
Demand for Malaysian palm oil from India has been hit by a diplomatic row between the two countries.
India, the world’s largest edible oil buyer, this month effectively halted Malaysian palm oil imports apparently in retaliation to Malaysian Prime Minister Mahathir Mohamad’s comments criticising New Delhi over its policy on Kashmir.
In a bid to ease tensions, Malaysia’s top sugar refiner said it will increase purchases of the commodity from India, Reuters reported on Thursday.
Elsewhere, soyoil futures on the Dalian Commodity Exchange fell 0.1pc, while the palm oil futures contract traded 1.7pc higher. Soyoil on the Chicago Board of Trade last traded 1.3pc lower.
Palm oil is affected by price movements in related oils as it competes for a share of the global vegetable oil market.
Published in Dawn, January 24th, 2020