KL palm oil climbs on Indian shortage

KL palm oil climbs on Indian shortage

KUALA LUMPUR (Reuters): Malaysia's crude palm oil futures
touched the 1,085 ringgit major resistance level on Thursday on
talk that India is facing an edible oil shortage and may cut palm
oil import duties, traders said.

In Indonesia, the world's second largest palm oil producer
after Malaysia, such talk aroused demand from European buyers who
believed they needed to stock up before India, the world's
largest edible oil importer, came to the market.

At the close, the benchmark November futures contract ended up
14 ringgit at 1,075 ringgit ($282.89) a ton after trading as high
as 1,085 ringgit. Volume was 1,834 lots.

"We've got more demand from European buyers because of the
Indian talk," said one trader in Jakarta.

"We heard that one edible oil importer in south India is
facing a shortage in oil and is ready to buy RBD palm olein at
high prices. But I don't hear more details," he added.

But some traders said a number of major importers in India
were intentionally holding back palm oil stocks at local ports to
stir up speculation the country was facing a shortage of oil and
may cut palm oil import duties.

"These guys believe that India will reduce the base prices and
import duties in the first week of September. If that happens,
those importers can take out that oil from the tanks and pay less
duties," said one trader in Kuala Lumpur.

"Not only are they holding their stocks at customs bonded
tanks, they are also buying oil at the domestic market just to
create fear there is a shortage," he added.

In February, India imposed its heaviest-ever duty of 75
percent on crude palm oil and 85 percent on refined palm oil.

In August, India fixed the base import price of crude palm
olein at $357 a ton. It means any importer will have to pay duty
assessed on an import price of $357 a ton for the oil no matter
what its purchase price.

India had earlier fixed the base import price of crude palm
oil at $337 a ton and RBD palm olein at $372 a ton.

Also last month, talk circulated in the Malaysian market that
some local refiners had shifted their palm oil to joint ventures
in Singapore, India and China due to swelling stocks and a
slowdown in demand.

Ot the physical side, September crude palm oil for southern
and central regions were offered at 1,080 ringgit a ton against
bids at 1,075. There were trades at 1,075 to 1,082.50 for both
sides.

Among refined products, September RBD palm oil was offered at
$297.50 a ton, October $300 and November/December at $302.50.

Offers for September RBD olein were at $312.50, October at
$315 and November/December at $317.50.

September/October RBD palm stearin was offered at $255 a ton
and September/October palm acid distillate was offered at $205.