MUMBAI (Reuters) - Malaysian palm oil futures extended declines on Tuesday to hit their lowest in nearly a month, weighed down by lacklustre export demand, but they trimmed losses in the second half of the trading session on reports India will raise an import tax on soft oils.
The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 0.37 percent at 2,400 ringgit ($604.53) a tonne by the close. Earlier in the session, the contract hit 2,382 ringgit, its lowest since May 8.
Trading volume stood at 33,099 lots of 25 tonnes.
“Ramadan buying has fizzled out. Fresh export orders are not coming in at the expected pace,” a Kuala Lumpur-based palm trader said.
Buyers typically stock up on palm oil a month before Ramadan, which began in mid-May this year.
Malaysia’s palm oil exports in May dropped 8.8 percent from April to around 1.2 million tonnes, independent inspection company AmSpec Agri Malaysia said last week.
Cargo surveyor Societe Generale de Surveillance (SGS) said the country’s May palm oil exports fell 9.9 percent from a month ago.
In Indonesia, the world’s top palm oil exporter, shipments of palm and palm kernel oils plunged 13.6 percent in April, data from the Indonesia Palm Oil Association showed.
“If the current trend continues, then Malaysia’s June export numbers could be lower than May,” another Kuala Lumpur-based palm trader said.
The market pared losses later in the session on reports India could raise an import duty on soft oils like soyoil, making palm competitive, the dealer said.
Indian farm secretary said an import duty on soft oils could be raised in a week.
In related vegetable oils, the Chicago July soybean oil contract was down 0.2 percent, while September soybean oil on China’s Dalian Commodity Exchange dropped up to 1.25 percent.
Palm oil is affected by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Palm oil may break a support at 2,408 ringgit per tonne and fall to the next support at 2,364 ringgit, as suggested by a retracement analysis, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
Palm oil inventories in Malaysia, the world’s second-largest producer, are expected to slip to an eight-month low in May, weighed down by a decline in production, according to a Reuters poll.
Reporting by Rajendra Jadhav, Editing by Sherry Jacob-Phillips and Jane Merriman