Palm oil rises to near record highs

February 14, 2022: Malaysian palm oil futures rose 1% on Monday, hovering near record highs after top buyer India lowered import taxes for the edible oil.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 83 ringgit, or 1.49%, to 5,656 ringgit ($1,349.88) a tonne during early trade.

FUNDAMENTALS

India has cut its tax on crude palm oil (CPO) imports to 5% from 7.5%, the government said in a notification, as the world's biggest edible oil importer tries to rein in local prices of the commodity and help domestic refiners and consumers.

The reduction in the tax, known as the Agriculture Infrastructure and Development Cess (AIDC), will widen the gap between the CPO and refined palm oil import duties, effectively making it cheaper for Indian refiners to import CPO, industry officials told Reuters.

Dalian's most-active soyoil contract rose 0.8%, while its palm oil contract gained 1.9%. Soyoil prices on the Chicago Board of Trade were up 0.9%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil remains neutral in a range of 5,524-5,608 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.

MARKET NEWS

Asian shares sagged on Monday as warnings that Russia could invade Ukraine at any time sent oil prices to seven-year peaks boosted bonds and belted the euro.

Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world's top producer in an already tight market.

Reuters