Palm Oil Rises On Cut In India Import Duty Weaker Ringgit

Malaysian palm oil futures recovered on Monday from a nearly 2 percent fall in the previous session, supported by expectations of more imports from India and on a weaker ringgit.

Benchmark palm oil futures for December on the Bursa Malaysia Derivatives Exchange rose 1.5 percent to 2,715 ringgit ($656) a tonne at the midday break.

Traded volumes stood at 16,184 lots of 25 tonnes each at noon.

It fell 1.8 percent on Friday, weighed down by lower demand and profit-taking.

India announced on Friday it would lower its import duty on crude palm oil and refined vegetable oils by five percentage points to 7.5 percent and 15 percent, respectively, as part of efforts to curb food inflation.

Traders say the lowered rate is expected to boost palm exports, which have slowed this month on weaker demand from India.

Palm oil shipments from Malaysia, the world’s second largest palm producer, fell 15.6 percent in the Sept. 1-25 period from the corresponding period last month, data from cargo surveyor Intertek Testing Services showed on Monday.

Separately, the ringgit weakened 0.6 percent against the dollar to 4.1330 as of 0530 GMT on Monday, making the tropical oil cheaper for holders of foreign currencies as palm oil is traded in ringgit.

“The market is up on late Friday’s news and the weaker ringgit,” said a futures trader from Kuala Lumpur, referring to India’s decision to cut import taxes on wheat, crude palm oil and refined vegetable oils.

“More imports from India will be coming.”

Demand from top consumers China and India usually weakens in the final quarter of the year, as cold temperatures in the northern hemisphere at the year end solidifies the tropical oil and makes it less appealing to buyers.

Palm is seen maintaining a target of 2,761 ringgit per tonne, according to Reuters’ market analyst for commodities and energy technicals, Wang Tao.

In related oils, the Chicago Board of Trade’s soybean oil December contract gained 0.6 percent, while the January soybean oil contract on the Dalian Commodity Exchange rose 0.2 percent.