KUALA LUMPUR, Oct 10: Malaysian palm oil futures ended sharply higher on Wednesday due to market-friendly export figures and India’s move to cut base prices of palm oils, traders said.
The benchmark third-month December palm oil contract was up 56 ringgit at 973 ringgit ($256.05) a tonne after trading as high as 980 ringgit, slightly below key resistance of 986 ringgit.
Volume was heavy at 4,299 lots.
Technical analysts pegged support at 927 ringgit and 931 ringgit.
Some traders said they remained cautious despite the bullish news because of anticipation that soyoil prices would ease in response to India’s move and encourage buyers to turn to palm oil’s direct competitor.
MUMBAI: Indian importers are likely to increase palm oil buying in the next few months following the government’s cut of base import prices.
The reduction, announced on Tuesday, has resulted in a 10 to 20 per cent fall in the effective import levies on palm oils, making imports more attractive, traders said on Wednesday.
Edible oil imports will be higher in October and November than expected earlier, said B.V. Mehta, executive director of the Solvent Extractors’ Association of India.
India, the world’s largest buyer of edible oils, is now likely to buy more than the earlier estimated 400,000 to 450,000 tonnes in October, he said, but did not provide a new figure.
Following the government’s price revision, India could buy 300,000 to 350,000 tons of edible oils in November, more than the 250,000 tons projected earlier, according to traders’ estimates.
The government lowered its base import price of crude palm oil (CPO) to $286 per ton from $337 a ton, which it fixed in August in a bid to prevent under-invoicing.
It also cut base prices of RBD palm oil to $295 per ton from $351 and of RBD palm olein to $307 a ton from $372.
Importers will now have to pay duty on the fixed import price of the oils irrespective of the actual purchase prices.
Imports of soyabean oil may marginally decline due to a reduction in base import prices of palm oils, said Rajnikant Rai, vice president of the commodity trading division of ITC Ltd.
Prices of palm oil fell significantly in the local market after the base price revision on Tuesday, but soyoil prices remained steady at the previous level.
India imposes a 75-per cent import duty on CPO, 85 per cent on RBD palm olein and 45 per cent on soy oil.
The palm oil sector closed $5 to $30 per ton firmer in Europe on Tuesday.
India imported 4.15 million tons of edible oil between November 2000 and August 2001, up from 3.47 million tons in the same period a year earlier.
Increased supply of local edible oils in the next few months would keep a check on a sharp rise in imports, traders said.
Imports will rise, but only marginally, said a commodity analyst, adding that the share of soyoil imports would decline.
Arrivals of soyabean and groundnut, India’s main winter oilseed crops, have started picking up. The current winter oilseed output is estimated to rise to 12.5-13.0 million tons from 10.9 million tons a year ago.
Traders said they prefer palm oil imports from Malaysia and Indonesia due to lower voyage time, about 12 days, compared with nearly 40 days for soyoil vessels coming from South America.
But it depends on global prices of edible oils, they added.
The price revision will depress the domestic edible oil market, said Devi Prasad Khandelia, chairman of the Central Organization for Oil Industry and Trade.
Prices of RBD palm olein declined to 27,500 rupees ($572) per ton in Mumbai on Wednesday from Rs28,100 a day earlier.
CPO prices fell to Rs23,700 a ton from Rs24,500 while prices of soyoil remained at Rs24,200 per ton.—Reuters