KUALA LUMPUR, Feb 27: Malaysian palm oil cracked a major price resistance on Monday after weeks of struggle, with players driving the futures market to new 11-month highs on talk that key buyer India could make palm as competitive as soyaoil.

Speculation is rife that New Delhi would announce in its 2006 federal budget on Tuesday a new tax structure for edible oils that would bring palm oil from Malaysia and Indonesia on par with soyaoil from South America.

Under its commitment to the World Trade Organization, India can levy a maximum duty of only 45 per cent on soyaoil. But palm and other oils face taxes of up to twice as much, prompting allegations of discrimination.

Industry officials have said India could get around its WTO policy by reclassifying soyaoil, where it merits, as a genetically-modified product that needs a higher levy.

The benchmark third-month May palm oil contract on Bursa Malaysia Derivatives closed up 18 ringgit at 1,510 ringgit ($406.46) a ton, after trading in a 29-ringgit range. Its intraday high was 1,512 ringgit.

The third-month last breached the 1,500 level when it touched 1,504 ringgit on March 16, 2005.

But every 10 ringgit it goes up from here, you’ll see the momentum slowing, said a dealer. It either breaks 1,550 or slips down to 1,450 before that.

A total of 11,946 lots of 25 tons changed hands, almost double the volume seen on the busiest days of this year.

At least 6,000 to 7,000 lots were done in the last 25 minutes, said a trader. That’s how panicky some people got and rushed in when they saw others buying.

The upswing was also supported by higher estimates of palm oil shipments for February.

Exports of oil palm products for Feb. 1-25 were estimated to have risen 8.5 per cent to 843,660 tons from the 777,781 tons tracked for Jan. 1-25, Societe Generale de Surveillance, the main cargo surveyor watched by the market, said on Monday.

In physical trade of crude palm oil, buyers/sellers for March stood at 1,477.50/1,485 ringgit a ton in Malaysia’s southern and central regions.

—Reuters