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VEGOILS-Palm reverses early fall as India lowers base prices

06/17/2021 | 02:11am EDT

SINGAPORE, June 17 (Reuters) - Malaysian palm oil futures rose more than 1% to reverse early falls on Thursday, as top buyer India lowered base crude palm oil prices and the ringgit weakened.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 41 ringgit, or 1.2%, to 3,444 ringgit ($833.49) a tonne by the midday break.

"Palm oil prices found some emotional support from India's price revision late last night, which could favour palm oil imports over soy oil," said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

Late on Wednesday, the Indian government revised the base import price of crude palm oil to $1,136 a tonne from $1,222 a tonne. India uses the base import price to calculate the amount of tax an importer needs to pay. It, however, did not tweak import taxes on edible oils.

Also supporting palm prices was a weaker ringgit, which fell 0.4% against the dollar. A weaker ringgit makes palm cheaper for people who hold other foreign currencies.

Palm's gains were however capped by cheaper rival oils and weaker export data.

The Chicago Board of Trade soyoil contract fell 0.3%. U.S. soybean futures fell for a seventh consecutive session as a stronger dollar pushed prices to a two-month low.

Soybean oil prices on the Dalian Commodity Exchange dropped 1.7%, while the palm oil contract fell 1.8%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Exports of Malaysian palm oil products for June 1-15 fell 7.9% from the same period a month ago, cargo surveyor Societe Generale de Surveillance said.

Palm oil may break a support at 3,351 ringgit per tonne and fall to 3,195 ringgit, Reuters analyst Wang Tao said. ($1 = 4.1320 ringgit)

(Reporting by Fathin Ungku; Additional reporting by Mayank Bhardwaj; Editing by Shailesh Kuber and Subhranshu Sahu)

© Reuters 2021
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