Malaysian palm oil futures fell on yesterday as investors cut positions amid fears that demand for the tropical oil is slowing down and on worries that India might impose import duties, traders said.
The benchmark September palm oil contract on the Bursa Malaysia Derivatives Exchange lost RM57, or 2.5 per cent, to RM2,262 a tonne. Overall traded volume was 12,695 lots at 25 tonnes each.
A trader at a Kuala Lumpur-based brokerage firm said the people were anticipating that demand may not be picking up.
“I guess tomorrow’s exports figures may give some ideas,” the trader added, referring to June exports estimates due to be released by cargo surveyors today.
There was also concern that India, the world’s second-biggest vegetable oils buyer, would impose import taxes on palm oil and soyoil as part of the budget due to be presented on July 6, another Malaysian-based trader said.
The demand fear might have encouraged some short-selling as some investors bet palm prices could drop below major support at RM2,250 soon, said the trader.
“If we break that level, the market could fall further,” the trader said, adding that he was looking at the next support level of RM2,180t.
The Solvent Extractors’ Association of India (SEA), a leading trader body, said last week India should slap an import tax of at least 20 per cent on crude palm oil, 30 per cent on refined palm oil and 25 per cent on crude soyoil.
India does not tax crude edible oil imports, while it levies a 7.5 per cent tax on refined oils, and this has led to massive stockpiling over the past few months. Further shipments have slowed as Indian port warehouses are full.
In the Malaysian palm oil physical market, the bid and ask prices for June/July delivery were quoted at RM2,275/2,300 in the southern and central regions. No trades were done.
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