KUALA LUMPUR: Palm oil futures rose to their highest in nearly two weeks at the midday break of the first trading day of 2019, after the world’s largest edible oil importer India announced import tax cuts, amid expectations of a fall in production.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 1.7% at RM2,156 ringgit a tonne at the midday break.
It earlier rose as much as 1.8% to RM2,159, its strongest levels since Dec 21. Trading volumes stood at 14,848 lots of 25 tonnes each at noon today.
“Palm is higher today on India’s import tax cut and production, which is expected to be down for the whole month also,“ said a futures trader in Singapore.
Palm oil output in Malaysia, the second largest producer of the vegetable oil, seasonally declines in the first few months of the year after peaking in the previous quarter. November production had slid 6.09% from the previous month to 1.85 million tonnes, according to industry regulator data.
India said late on Monday it would lower the duty on crude palm oil imports to 40% from 44%, while a tax on refined oils was cut to 50% from 54%.
Malaysian shipments of refined palm oil, however, will be taxed at 45% compared with 54% earlier.
Despite the tax cuts, traders expect market gains to be short-lived as palm inventory levels in Southeast Asia remain high. – Reuters