Palm oil eases as prospect of tepid India demand weighs

Malaysian palm oil futures eased on Thursday, weighed down by the prospect of softer demand amid India’s duty concessions for imports of edible oils, although forecast of lower production provided a floor to prices.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange was down 18 ringgit, or 0.46%, at 3,861 ringgit ($818.53), as of 0648 GMT.

India, the world’s biggest importer of vegetable oils, on Wednesday allowed limited imports of corn, crude sunflower oil, refined rapeseed oil, and milk powder under the tariff-rate quota (TRQ), where importers pay nil or lower duty, as New Delhi tries to bring down food inflation.

Exports from Malaysia during June 1-25 fell between 16.1% and 16.9% from the same period in May, cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia said earlier this week.

Production in the world’s second-largest grower during June 1-20 is forecast to decline 6.3% from a year-ago period, traders and analysts said, citing data from the Malaysian Palm Oil Association.

Dalian’s most-active soyoil contract DBYcv1 gained 0.34%, while its palm oil contract DCPcv1 was trading flat. Soyoil prices on the Chicago Board of Trade BOcv1 edged 0.1% higher.

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

Oil prices dipped on Thursday as a surprise build in U.S. stockpiles fuelled fears about slow demand from the world’s top oil consumer, though declines were capped by worries a potential expansion of the Gaza war may disrupt Middle East supplies.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Tags: prices, India, Malaysia, palm oil, futures, benchmark contract, soyoil