VEGOILS-Palm ends nearly 5% lower on weakness in rival oils, demand fears

  • Reuters
  • Commodities News
VEGOILS-Palm ends nearly 5% lower on weakness in rival oils, demand fears

* Palm posts biggest daily decline in nine months

* Higher Indian import tax could hurt demand - analyst

(Updates with closing prices)

By Mei Mei Chu

KUALA LUMPUR, Feb 3 (Reuters) - Malaysian palm oil futures plunged as much as 5% on Wednesday, tracking deep losses in rivals Dalian and soyoil, as fears of continuing weak exports after top buyer India imposed higher taxes weighed on sentiment.

The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange closed down 162 ringgit, or 4.78%, at 3,229 ringgit ($797.48) a tonne.

It fell for a second day and logged its sharpest daily decline in nine months.

"The crude palm oil (CPO) market was reacting to the higher Indian import tariffs for the second day on bearish news dampening export demand to the world largest palm oil buyer," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

India on Monday announced an additional tax on crude palm oil imports, effectively raising duties to 35.75% tax from 30.25% earlier. higher effective import duties for CPO will raise the cooking oil price in India and could dampen demand for palm oil," CGS-CIMB Research said in a note.

This narrows the tax difference between crude palm oil and refined oil and could favour Indian imports of processed palm oil, it said.

Exports of Malaysian palm oil products for January declined between 32% and 37% from December, cargo surveyors said on Monday, and traders are now concerned that weak exports would spillover to this month.

Dalian's most-active soyoil contract DBYcv1 fell 2.4%, while its palm oil contract DCPcv1 slipped 2.9%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 1.4%.

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

($1 = 4.0490 ringgit)

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