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BMD CPO Ends 1.68% Lower On Demand Concerns

23 Jan 2020 4:07 pm
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MUMBAI (Commoditiescontrol) - Malaysian palm oil futures ended lower by 1.68 percent on Thursday amid worries that Indian demand for Malaysian palm oils will drastically fall due to diplomatic tensions and due to decline in crude prices in the wake of the outbreak of coronavirus in China.

India, the world's largest edible oil buyer, has restricted imports of refined palm oil and informally instructed traders to avoid purchases from Malaysia, following a diplomatic spat.

Prices were further weighed down by rumours that India may reduce import duties on other vegetable oils more than on palm.

The April benchmark crude palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD), was down 50 Ringgit or 1.68 percent at 2,923 Ringgit a tonne by the close after moving in the range of 2,966 Ringgit and 2,912 Ringgit a tonne.

It jumped over 3 percent in the previous session after an industry body forecast a bigger-than-expected drop in output and on hopes that India would reduce duties on imports of the vegetable oil.

The market is heading for its first monthly drop since September.

Crude oil prices fell to their lowest in seven weeks on Thursday on concerns that the spread of a newly identified respiratory virus from China may lower fuel demand at the same time a report showed oil inventories in the United States rose last week.

Palm oil prices benefit from higher crude prices, which make it more economically attractive to use the edible oils in biofuel, seen as a greener alternative to petrol and diesel.

A rapid increase in coronavirus cases in China may also impact domestic tourism flows during the spring festival and reduce demand for cooking oil.

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