Palm-Oil Shipments From Indonesia Set to Gain on Lower Duty

Palm-oil shipments from Indonesia, the largest producer, may have climbed 23 percent in July from a month earlier as companies took advantage of a lower export tax to book cargoes and demand rose ahead of a Muslim festival.

Exports will probably gain to 1.4 million metric tons from 1.14 million tons in June, according to the median of five plantation executives in a Bloomberg News survey. Output may fall 5 percent to 2 million tons, three of the respondents said. The executives didn’t provide estimates for inventories.

Palm oil in Malaysia, the global benchmark price in the second-largest producer, has advanced 4.7 percent from an eight-month low in June as soybeans in Chicago rallied to a record on damage from a drought in the U.S. Indonesia cut the duty for exports to 15 percent this month from 19.5 percent in June.

“Exports will increase as some shipments were delayed to July” because of the lower tax, Joelianto, a Jakarta-based trader at PT Sinar Mas Agro Resources and Technology, a unit of Golden Agri-Resources Ltd., said by e-mail, adding that demand for the Eid festival also supported overseas sales.

Most-active palm oil futures were at 2,970 ringgit ($945) a ton on the Malaysia Derivatives Exchange at 11:18 a.m. in Kuala Lumpur. Soybeans, which can be crushed to provide a rival oil, reached a record $16.915 a bushel on the Chicago Board of Trade on July 23. That day, soybean oil was $263.43 a ton more costly than palm oil, the biggest premium since September.

Tax Policy

The Indonesian government reviews the tax rates and base export prices every month, based on average rates in Kuala Lumpur, Rotterdam and Jakarta. The tax will remain at 15 percent in August, Deddy Saleh, director general of foreign trade at the Trade Ministry, said on July 27. The base price to calculate the levy was raised to $950 a ton for August from $944.

Muslims celebrate the Eid festival next month, which marks the end of the Ramadan fasting month, when consumption of cooking oils typically climbs as communal meals lift overall demand for the staple.

Indonesia exported 1.14 million tons of palm oil last month, 17 percent less than May, the Indonesia Palm Oil Association, or Gapki, said July 27. That was lower than the median estimate of 1.5 million tons from five companies in a Bloomberg survey.

Indonesia’s shipments of palm kernel oil rose 49 percent to 111,640 tons in June from a month earlier, Gapki data show, bringing total palm and lauric-oil exports to 1.25 million tons last month, down 13 percent from May.

Exports of palm and kernel oils to India fell 30 percent to 311,850 tons last month, while shipments to China rose 18 percent to 311,030 tons, data show. European countries bought 240,560 tons in June, 17 percent less than a month earlier.

Output and exports from Indonesia may decline in August as activities slow during the Eid holiday, said Susanto, head of marketing at the palm oil association. Shipments may rebound in September and October in line with higher production, said Teguh Patriawan, president director of PT Nusantara Sawit Persada.

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