Malaysia left the tax on crude palm oil exports unchanged for a seventh month in September as the world’s second-largest producer seeks to boost shipments before inventories expand and output accelerates.
Shipments will be taxed at 4.5 percent next month as the reference price was set at 2,281.72 ringgit ($696) a metric ton, within the minimum band for a levy to be applied, according to a Customs Department statement. The tariff was zero in January and February before being raised to 4.5 percent in March.
Palm oil futures tumbled to the lowest since October 2009 last month as global supplies outpaced demand. Malaysia said in October last year it would cut the tax to between 4.5 percent and 8.5 percent from about 23 percent to help trim stockpiles and compete with Indonesia, the largest producer. Indonesia kept its export tax on crude palm oil at 10.5 percent this month.
“The differential between Malaysian palm and Indonesian palm is quite attractive for exports out of Malaysia,” said Gnanasekar Thiagarajan, a director with Commtrendz Risk Management Services Pvt. in Mumbai. “Exports have started picking up and prices will be firm in the near term. Most of the destinations have not covered enough oil thinking that prices are going to fall, so they will all come to buy when prices go up, because that’s the nature of physical buyers.”
Futures in Kuala Lumpur were headed for the biggest weekly gain in 32 months today as soybeans rallied on concern that the U.S. may harvest a smaller crop than forecast. The contract for delivery in November was 1.4 percent higher at 2,331 ringgit a ton by the midday break on the Malaysia Derivatives Exchange. Palm competes with soybean oil in food and biofuels uses.
India, the world’s largest palm oil importer, may find it more attractive to buy the oil from Malaysia instead of Indonesia, Thiagarajan said. Purchases by India declined for the first time in three months in July after a slump in the rupee to a record low increased costs for refiners, according to the Mumbai-based Solvent Extractors’ Association of India.
Shipments from Malaysia climbed 18 percent to 644,589 tons in the first 15 days of August, surveyor Intertek said yesterday. Exports rose 0.5 percent to 1.42 million tons in July, while inventories climbed 1 percent to 1.66 million tons, the Malaysian Palm Oil Board said Aug. 14. Stockpiles reached a record 2.63 million tons in December.
To contact the editor responsible for this story: Jake Lloyd-Smith at email@example.com