Palm oil shipments from Indonesia, the world’s largest grower, may decline to the lowest level in four months in February as more buyers turn to Malaysia after it extended duty-free shipments to clear record stockpiles. Futures fell to a two-week low.
Exports will probably drop 5.6 percent to 1.51 million metric tons from January, according to the median of estimates from three plantation companies, one analyst and one refiner compiled by Bloomberg. Output may slide 8 percent to 2 million tons, while inventories contract 14 percent to 3 million tons.
Malaysia, the second-biggest producer, set the tax on crude exports at zero for January and February after revamping tariffs to try to clear the reserves. Prices in Kuala Lumpur, which lost 23 percent last year, advanced 2.3 percent in 2013 amid speculation holdings will drop as exports gain and supply shrinks. India, the top buyer, introduced an import tariff last month, while Indonesia raised its export tax for February.
“Malaysia is more competitive,” said Eddy Martono, a director at Jakarta-based planter PT Mega Karya Nusa. “We’re hit by double taxation, with India imposing an import tariff and Indonesia raising the export tax.”
The Indonesian Palm Oil Association, known as Gapki, will release its estimate for January’s exports at the end of this month, and follow with the February figure in March. The group, which forecasts prices will rally this year as demand increases, doesn’t issue data on output or reserves. Stockpiles of 3.5 million tons in January, according to an earlier Bloomberg survey, were the largest since the surveys began last May.
“High inventories are a big concern,” said Helmy Kristanto, an analyst at PT Danareksa Sekuritas, who didn’t contribute to the survey. “But historically output is falling in January and February, and stockpiles follow this trend” as estates enter the low-production season, he said by phone.
Futures on the Malaysia Derivatives Exchange, the regional benchmark, lost 2.2 percent yesterday after the country’s Palm Oil Board released data for reserves, shipments and output in January. Stockpiles fell 1.9 percent from a record to 2.58 million tons, a smaller decline than forecast. Exports eased 1.6 percent as production dropped 10 percent, it said. Prices extended losses by 0.5 percent to 2,492 ringgit ($807) a ton today, the lowest level in two weeks.
Indonesia, which set the export duty at 9 percent for this month from 7.5 percent in January, will keep its tax policy for now, Deputy Trade Minister Bayu Krisnamurthi said on Feb. 7. India introduced a 2.5 percent tariff on imports last month to protect local oilseed growers.
Prices in Malaysia should bottom in the second quarter, then rebound as “high inventories are unlikely to last long,” HSBC Holdings Plc said in a report on Feb. 7. Dwight Anderson, founder of hedge fund Ospraie Management LLC, said in December that palm was one of his top commodity picks for 2013.
The February export estimate for Indonesia would be the lowest since October, when shipments reached 1.42 million tons, according to data from Gapki. Executive Director Fadhil Hasan said in a Feb. 5 interview prices may rebound this year as demand recovers in India and China.
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