BLBG:Palm Oil Drops as Lower Exports, Indian Tax May Bolster Reserves
Palm oil declined for the first time in three days on concerns that inventories in Malaysia may stay near record levels as exports drop and India, the world’s biggest buyer, plans to tax imports to protect local growers.
The contract for delivery in April, which has the largest volume, fell as much as 0.9 percent to 2,408 ringgit ($797) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,417 ringgit in Kuala Lumpur.
Palm oil slumped 23 percent last year, falling to a three- year low of 2,217 ringgit on Dec. 13, as economic slowdowns in Europe and China reduced demand. Stockpiles in Malaysia jumped to an all-time high of 2.63 million tons in December, according to the nation’s palm oil board. Exports tumbled 21 percent to 570,510 tons in the first 15 days of this month from the same period in December, Intertek said Jan. 15.
“Malaysian exports are not that impressive and showed demand weakness,” Chung Yang Ker, an analyst at Phillip Futures Pte Ltd. in Singapore, said by phone. Futures may trade in a range of 2,400 ringgit and 2,480 ringgit a ton, he said.
JPMorgan Chase & Co. cut its palm oil price forecast by 10 percent to 2,600 ringgit a ton for 2013-2014 from 2,900 a ton earlier, analysts Simone Yeoh and Ying-Jian Chan said in a report today, citing an overhang of inventories.
India will consider imposing a 5 percent duty on crude palm oil imports to shield domestic oilseed growers from cheap supplies, according to two government officials. The cabinet may also discuss raising the tariff on refined cooking oils to 10 percent from 7.5 percent today, they said yesterday.
A duty on Indian imports would delay palm oil price recovery further, Chye Wen Fei, an analyst at Hong Leong Investment Bank in Kuala Lumpur, wrote in a report today.
Refined palm oil for delivery in May fell 0.5 percent to 6,740 yuan ($1,083) a ton on the Dalian Commodity Exchange. Soybean oil for September rose 0.4 percent to 8,698 yuan a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.
