Palm oil prices fall on duty cut

Palm oil prices fall on duty cut

LONDON (Reuters): Palm oil prices fell sharply in Rotterdam and London on Friday after Indonesia confirmed it would reduce its export duty on crude palm oil and by-products.

In Europe, traders pushed palm oil down between US$7.50 and $10 a ton to $352.50 for May to July delivery and the refined product, palm olein, between $15 and $17.50 on news the crude palm duty would be cut to 10 percent from 30 percent.

The duty cut in the oil, used primarily in cooking, cosmetics, soaps and detergents, means more oil will come onto the market at lower prices, swelling a supply glut.

Ballooning stocks have pushed crude oil down from $650 a year ago for a similar delivery period.

Gold ended a quiet trading day above $263.00, with dealers saying most market participants had already positioned themselves ahead of next week's key UK gold auction.

Britain is due to sell 25 ton of reserve gold in a competitive auction next Tuesday, the first in a series intended to cut reserves by 125 tons to 590 tons by next March and to 300 tons during the next few years.

But there was huge demand for gold options with one-month volatility, an indicator of market thinking on future spot price moves, traded at around 13.50 percent on Friday, down from a high of around 17 percent on June 6 but well above historic implied volatility of eight percent.

A higher volatility suggests heightened market uncertainty about the direction of the gold price.

Copper, which hit a 9-1/2 month high on Thursday after a $200 gain on the week on production cuts, settled down on Friday and ended off its new peak of $1,692 at $1,670.

"It has been relatively quiet today and we are just tidying up positions," one LME broker said.