22/03/2013 (Reuters) - Malaysian palm oil futures ended off their highest in more than three weeks on Thursday after refiners took advantage of a cheap local tax rate to boost crude palm oil purchases.

Crude palm oil from No.2 producer Malaysia is currently cheaper than products from top producer Indonesia, thanks to an export tax levied at 4.5 percent, compared with Indonesia's 10.5 percent.

Malaysian palm oil exports rose by up to 14 percent in the first 20 days of March, but investors are wary that rising prices could lead to a tax hike in May and weigh on demand. Malaysia sets its export tax on crude palm oil each month based on prices. April's tax rate has been set at 4.5 percent.

Investors are also concerned that an import duty hike in India, the world's biggest edible oil buyer, will crimp future demand, traders said.

"Although the demand continues to show signs of struggling, the increase in crude palm oil buying by local refineries is suggesting for the most part everything is under control," said a trader with a local commodities broker in Malaysia.

By market close, the benchmark June contract on the Bursa Malaysia Derivatives Exchange had risen 0.5 percent to 2,455 ringgit ($787) per tonne, coming off an early high of 2,477 ringgit, a level unseen since Feb. 25.

Total traded volume stood at 39,194 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technical analysis showed Malaysian palm oil was expected to rise to 2,498 ringgit per tonne, said Reuters market analyst Wang Tao.

Traders say an export duty hike for the crude grade would turn buyers to refined palm products. Cargo surveyor data showed that refined palm olein exports almost doubled between March 1 and 20, offsetting weaker crude palm oil shipments and giving a leg up to overall exports.

The higher exports of palm oil products, alongside seasonally slowing output, would help to further ease inventory levels in Malaysia, which have edged down to 2.44 million tonnes in February from December's record highs.

In other markets, crude oil was pushed lower on Thursday by fears of further turmoil in the euro zone, as Cyprus scrambled to avoid bankruptcy, and by manufacturing data which showed a deepening downturn in the currency bloc.

In other vegetable oil markets, U.S. soyoil for May delivery rose 0.8 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange also closed 0.8 percent higher.   

  Palm, soy and crude oil prices at 1003 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR3    2437   +11.00    2433    2455     204
  MY PALM OIL      MAY3    2449   +10.00    2445    2472    6213
  MY PALM OIL      JUN3    2455   +13.00    2451    2477   17303
  CHINA PALM OLEIN SEP3    6412   +84.00    6374    6460  499458
  CHINA SOYOIL     SEP3    8146   +62.00    8126    8192  533392
  CBOT SOY OIL     MAY3   50.26    +0.42   49.82   50.41    6322
  NYMEX CRUDE      MAY3   92.99    -0.51   92.79   93.53   14933

  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
  ($1=3.12 ringgit)