Palm oil shipments from Malaysia tumbled in the first 15 days of January, adding to signs that a zero-rated tax on exports intended to clear record stockpiles has yet to boost trade.
Exports declined 21 percent to 570,510 metric tons from the same period in December, surveyor Intertek said in a statement today. That compares with a 25 percent drop in the first 10 days of this month. Shipments retreated 22 percent to 571,481 tons over 15 days, according to Societe Generale de Surveillance.
The country, the largest producer after Indonesia, set the tariff at zero this month to drain reserves, and Plantation Industries and Commodities Minister Bernard Dompok said yesterday that the same rate would extend into February. Palm has tumbled into a bear market in Kuala Lumpur as stockpiles expanded and Indonesia, the biggest grower, boosted exports.
“We continue to compete with Indonesia and there’s no good visibility on whether our zero percent export tax is working or not,” said Arhnue Tan, an analyst at Alliance Investment Bank Bhd. “It may take some time.”
Exports to China, the biggest consumer after India, fell 45 percent to 120,950 tons in the first 15 days of January, according to Intertek. China’s quality watchdog, the General Administration of Quality Supervision, Inspection & Quarantine, tightened inspections on imports of cooking oils from Jan. 1 to improve food safety.
Palm oil for March delivery advanced 1.1 percent to 2,397 ringgit ($795) a ton on the Malaysia Derivatives Exchange at 5:59 p.m., paring the loss over the past year to 24 percent. Today’s advance came after soybeans, which can be crushed to provide an alternative oil, rallied yesterday.
Stockpiles should start to decline and a level below 2 million tons will be “quite comfortable,” Dompok said yesterday. Inventories of the oil used in foods and fuels reached an all-time high of 2.63 million tons in December.
The Malaysian government said in October it would cut the export tax on palm oil to between 4.5 percent and 8.5 percent, from 23 percent, effective from Jan. 1. The tariff for this month was set at zero as the base price was below the threshold of 2,250 ringgit a ton that triggers the 4.5 percent rate.