BLBG:Palm Oil Advances as Malaysian Tax Proposal May Boost Shipments
Palm oil climbed for a second day as a proposal by Malaysia’s Plantations Industries and Commodities Minister to cut export taxes could increase shipments and lower stockpiles in the country, the largest producer after Indonesia.
The December-delivery contract rose as much as 2.3 percent to 2,404 ringgit ($786) a metric ton on the Malaysia Derivatives Exchange, and was at 2,355 ringgit by the 12:30 p.m. break. Futures reversed an earlier 1.3 percent decline and are set for a 7.5 percent drop this week.
The plan to cut export taxes on crude palm oil to between 8 percent and 10 percent from the current 23 percent will be presented to the Malaysian cabinet tomorrow, Plantations Minister Bernard Dompok said late yesterday. Companies which haven’t used their duty-free export quota for crude palm oil may be asked to surrender it to others, he said.
“The reduction in the CPO export tax, if approved by the cabinet, would help boost exports of CPO, hence reducing stockpiles and cushioning prices from falling further,” Chye Wen Fei, an analyst at Hong Leong Investment Bank Bhd., wrote in a report today.
Futures declined earlier after Dorab Mistry, director of Godrej International Ltd., said the bounce in prices probably wouldn’t last and the market would resume its decline to $749 a ton Cif Rotterdam. That would benefit Indonesia’s producers and allow Malaysian refiners to become competitive again, he said in an e-mailed reply to Bloomberg questions. He was pessimistic about the global economy, he said.
Rising Inventories
Crude palm oil was at $800 a ton Cif Rotterdam yesterday, according to data compiled by Bloomberg.
Palm oil has plunged 22 percent since the end of August as the global slowdown hurt demand for the oil used in everything from candy to biofuel amid a seasonal increase in production in Indonesia and Malaysia.
Stockpiles in Malaysia may have jumped to 2.6 million tons at the end of September, Ivy Ng, an analyst at CIMB Group Holdings Bhd. (CIMB), said yesterday. Inventories reached an all-time high of 2.27 million tons in November 2008, according to the Malaysian Palm Oil Board. The board is scheduled to release data for last month on Oct. 10.
Soybean oil for December delivery was little changed at 50.72 cents a pound on the Chicago Board of Trade. Soybeans for November delivery gained 0.5 percent to $15.3875 a bushel.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
