Refiners slash palm oil purchase from Malaysia
Futures slide amid fear of India raising duty over Mahathir’s comment
Indian refiners have stopped buying Malaysian palm oil for shipments in November and December fearing New Delhi could raise import taxes or enforce other measures to curtail imports from Kuala Lumpur, five traders told Reuters on Monday.
This comes even as Malaysian Prime Minister Mahathir Mohamad, according to news wire Bernama, said his government will monitor the trade situation with India, which is reported to be considering trade curbs on the Southeast Asian nation over his criticism of actions in Jammu & Kashmir (J&K). “They are exporting goods to Malaysia too. It's not just one -way trade, it’s two -way trade,” Mahathir was quoted as saying in the report. He further said he had not received “anything official” from India.
The possible Indian action will be in retaliation for Mahathir ’s controversial speech at the United Nations in September when he said India had “invaded and occupied” J&K.
Malaysian palm oil futures closed lower on Monday as traders fretted about likely import restrictions by India, and tracking weakness in related edible oils. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange ended 1.3 per cent lower at 2,156 ringgit ($515.05), the lowest since October. 4.
“Traders are confused on both sides. They don’t know how to plan their shipments,” said Sandeep Bajoria, chief executive of Sunvin Group, a Mumbai-based vegetable oil importer.
To b e “on the cautious side, buyers are preferring Indonesian shipments to avoid any possible impac t of higher dutie s”. For October, most of the import contracts have already been signed, said a Mumbai-based dealer with another trading firm, adding that imports would plunge from November as new contracts are not being signed with Malaysian sellers.
India is the world’s biggest importer of edible oils, and is the biggest buyer of Malaysian palm
oil. It bought 3.9 million tonne of Malaysian palm oil in the first nine months of 2019, according to data compiled by the Malaysian Palm Oil Board.
Meanwhile, a Kuala Lumpurbased trader said that weaker related vegetable oils and a stronger ringgit weighed on the market. The ringgit, palm oil’s currency of trade, was up 0.1 per cent, making the edible oil more expensive for foreign buyers.
US soy oil futures on the Chicago Board of Trade were down 0.4 per cent. The January palm oil contract on the Dalian exchange fell 2.5 per cent, while the January soy oil contract declined 0.5 per cent.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.