Palm oil dropped for the first time in five days after India, the biggest buyer, almost doubled the taxable prices of crude cooking oil imports to shield domestic oilseed growers from cheap overseas supplies.
The contract for delivery in April dropped as much as 1.1 percent to 2,453 ringgit ($804) a metric ton on the Malaysia Derivatives Exchange, before trading at 2,456 ringgit at 12:15 a.m. in Kuala Lumpur. Futures, which advanced to a three-week closing high on Jan. 23, are heading for a 2.3 percent gain this week. Financial markets in Malaysia were closed yesterday and will be shut on Jan. 28 for a holiday.
Higher taxes may lower Indian cooking oil imports after purchases reached a record 10.2 million tons in 2011-2012. Reserves in Malaysia, the second-biggest producer after Indonesia, jumped to an all-time high of 2.63 million tons in December, according to the nation’s palm oil board. Malaysia will maintain a zero tariff on exports of the crude variety, implemented this month, through February to cut the stockpiles.
“There are some concerns that India’s demand may come off” because of the new duty structure, said Ivy Ng, an analyst at CIMB Group Holdings Bhd.
The benchmark price of crude palm oil was raised to $802 a ton from $447, while that of crude soybean oil was increased to $1,190 from $580, the Central Board of Excise and Customs said yesterday. The rates, on which a 2.5 percent tax is applicable, will now be revised every fortnight.
The overall impact on demand may not be “significant” as calculations show the new rate would work out to about $20 a ton, said Ng. “It’s only $20 extra. If you look at CPO prices a year ago it was about $1,000 and today it’s $800, so it’s $200 cheaper,” she said referring to crude palm oil by its initials.
Refined palm oil for delivery in September gained 0.2 percent to 7,030 yuan ($1,130) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month climbed 0.4 percent to 8,724 yuan a ton.
Soybeans for March delivery were little changed at $14.3325 a bushel on the Chicago Board of Trade. Soybean oil for March delivery was little changed at 52.07 cents a pound.
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