MCX CPO closed higher for the third consecutive day on Wednesday on short covering as Centre has raised the import duty on crude palm oil to 30% from 15% and on refined oil to 40% from 25% in a bid to curb cheaper shipments and boost local prices for supporting farmers and refiners. Moreover, for the second half of Nov, base import price for crude palm oil and refined, bleached and deodorized palm oil were raised by $8 per tn each.
Malaysian palm oil futures ended higher on Wednesday, tracking buoyant by soy oil and crude oil prices, and prompting short covering among traders.
The ringgit has risen to 13-month highs following positive domestic economic growth data. The currency was up 0.68 percent to 4.1100 against the dollar. A stronger ringgit typically makes palm less attractive to buyers holding other currencies.
Outlook
We expect Ref Soy oil to trade higher as government hike import duty of edible oil including crude soy oil. However, sufficient edible oil stocks in the country may pressurize prices at higher levels. Moreover, higher international prices too support domestic edible oil prices.
CPO futures may trade higher due to increase in import duty to 30% and 40% for crude palm oi and refine palm oil respectively. For further movement in prices it will track currency movement and Malaysian palm oil while higher stocks in the country may keep the prices in a range.
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