March 20, 2009 1:00 GMT+8 Reuters - Malaysian crude palm oil futures inched higher yesterday as oil markets surged but top vegetable oil buyer India cutting import duties on rival soya oil dented some sentiment.India’s latest move feeds into fears that demand for palm oil would not be sustained beyond the second half of this month as palm oil trades at a slight premium to competitor soya oil.
The benchmark June contract settled up RM6 at RM1,911 per tonne after rising as high as RM1,945. Other traded months mostly fell except for the July contract, which rose RM22 ringgit. Overall volumes doubled to 21,334 lots of 25 tonnes each.
“It’s going to be downhill for palm oil since it’s trading at almost the same levels as soya oil. India will slow palm oil purchases even more, it’s quite upsetting,” said a local trader who deals extensively with India.
India has cut import duty on soya oil to keep domestic prices stable, Trade Secretary G.K. Pillai told reporters yesterday. Pillai did not give details but traders said import tax on crude soya oil, currently at 20 per cent, may be totally withdrawn like on crude palm oil that is imported duty free.
Cargo surveyors Societe Generale de Surveillance and Intertek Testing Services will unveil March 1-20 Malaysian palm oil shipments today. Traders are forecasting a roughly 9 per cent fall to 720,000 tonnes from about 794,000 tonnes Feb. 1-20.
Oil rallied to US$49 (US$1 = RM3.66) a barrel yesterday after a move by the Federal Reserve to buy government bonds on a large scale hit the US dollar and revived hopes the US economy could soon begin its recovery. In the physical market, palm oil for March was quoted at RM2,025-RM2,040 per tonne in the southern region. Trades were done between RM2,030 and RM2,040. - Reuters
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