Down 0.5% at MYR2,090/tonne on 6/09/19, Palm Oil prices have been dragged off their recent high of MYR2,210 in August 2019 on profit-taking and India’s move to raise import tax on Malaysian refined Palm Oil to 50% from 45% until March 2020.
Rising shipments of refined Palm Oil into India have hurt Indian refiners, resulting in an investigation into the tax structure proposed earlier in the year, resulting in the export of more than 3 million tonnes of CPO in the first 7 months of the year.
Malaysia is also likely to lose the Crown as the biggest supplier to India following the loss of duty advantage over Indonesia. So in the immediate term, some negative impact on CPO prices is expected as there is a firm likelihood of a slowdown in the deceleration of Malaysian CPO inventory.
For shipments scheduled for September, no changes are anticipated but there is a strong likelihood that Indian parties may opt to switch out refined oils with CPO for October shipments onwards.
CPO price is likely to continue trading within the downward sloping wedge formation with downside bias in the immediate term. Resistance expected at MYR2,195 (upper descending trend line) and support levels at MYR2,000 (psychological) and MYR1,902 (lower descending trend line). A breakout from the resistance level accompanied by rising volume traded should be viewed as bullish.
