Palm oil prices surge as India cuts import duties
02 Jan 2019
Palm oil futures in Malaysia rose to their highest in nearly two weeks on the first trading day of 2019, after India, the world’s largest edible oil importer, announced a reduction in import duties on crude and refined palm oil effective Tuesday to comply with preferential trade pacts with Southeast Asian nations.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 2.1 per cent at 2,166 ringgit ($523.82) a tonne at the close of trade, recording its strongest gain in more than a fortnight.
The contract had gone up by as much as 2.4 per cent to 2,171 ringgit, earlier in the day, hitting its strongest levels since 21 December.
Trading volumes stood at 32,672 lots of 25 tonnes each at the end of the trading day.
The import duty on crude palm oil, originating from Malaysia, Indonesia and other members of the Association of South East Asian Nations (ASEAN) has been cut to 40 per cent from 44 per cent, the Central Board of Indirect Taxes and Customs (CBIC) said in a notification.
The import duty on refined palm oil imported from Malaysia has been lowered to 45 per cent from 54 per cent, and to 50 per cent for its imports from members of the ASEAN, which includes Indonesia.
While India is the largest importer of palm oil, Indonesia is a major producer of edible oils, particularly palm, followed by Malaysia. Palm oil accounts for bulk of the total edible oils imported annually.
The duties have been cut, CBIC said "to provide deeper tariff concessions in respect of specified goods" when imported from ASEAN under the India-ASEAN Free Trade Agreement and Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA). The duty cuts are effective from 1 January 2019.
Palm oil output in Malaysia, the second largest producer of the vegetable oil, seasonally declines in the first few months of the year after peaking in the previous quarter.
November production had slid 6.09 per cent from the previous month to 1.85 million tonnes, according to industry regulator data.