Palm oil at 2.5 month high on India talk

Palm oil at 2.5 month high on India talk

KUALA LUMPUR (Reuters): Technical covering pushed Malaysian palm oil futures to a 2-1/2 month high on persistent talk that India planned to cut import duty, traders said on Wednesday.

The benchmark third-month September contract was up 16 ringgit at 854 ringgit (US$224.74) a ton. Volume was 2,005 lots.

India, whose crude palm oil import duty stands at 75 percent, was Malaysia's biggest palm oil buyer in 2000, taking 2.03 million tons.

Traders who deal with Chinese buyers said the market was hoping that demand by China would increase in the coming months because of the drought there.

Traders and analysts in India said on Wednesday the country's demand for edible oil was likely to dip in the near term due to monsoon rains but may pick up from September with the start of the festival season.

The short-term fall, however, will not affect imports, they said.

Consumption in the festival season is also boosted by a drop in edible oil prices following the arrival of domestic winter crops and an increase in farmers' income after the harvest.

Physical June/July crude palm oil (CPO) for the southern region was offered at 845 ringgit a ton against bids at 840. Trade was reported at 840 to 845.