Feb. 27 (Bloomberg) -- Palm oil fell for a sixth day, the worst run in more than two months, on speculation that India, the world’s biggest buyer, may increase import taxes in its annual budget tomorrow.
The contract for May delivery dropped 0.4 percent to 2,410 ringgit ($777) a metric ton on the Malaysia Derivatives Exchange, the lowest price at close for the most active contract since Jan. 18. The losing streak is the worst since Dec. 5, taking declines to 6.1 percent in the six days.
India may increase taxes on imports to shield farmers from cheap supplies, according to the Solvent Extractors’ Association of India. Finance Minister Palaniappan Chidambaram may raise the tariff on unprocessed oils to 10 percent from 2.5 percent in the federal budget tomorrow, while the tax on refined varieties could increase to 20 percent from 7.5 percent, it said last week. The government imposed a 2.5 percent tax on unprocessed oils for the first time since 2008 last month.
“There is a fear that exports from Malaysia may be threatened if India raises the duties,” Ambika T.B., an analyst at Karvy Comtrade Ltd., said by phone from the Indian city of Hyderabad. “Soybean oil supplies from South America will come into the market from next month and palm oil may face competition from its closest substitute.”
Prices may decline further this year after global oilseed supplies rose and Asian producers boosted acreage which will raise output, according to Dorab Mistry, director at Godrej International Ltd.
Soybean oil for May delivery climbed 0.3 percent to 49.55 cents a pound on the Chicago Board of Trade. Soybeans for May delivery rose 0.3 percent to $14.355 a bushel.
Refined palm oil for delivery in September advanced 0.5 percent to close at 6,732 yuan ($1,081) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month ended little changed at 8,324 yuan a ton.
--Editor: Thomas Kutty Abraham