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Palm Oil Climbs as Indonesian Tax Increase May Benefit Malaysia

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Jan. 29 (Bloomberg) -- Palm oil gained on speculation that exports from Malaysia may increase after Indonesia, the world’s largest-producer, announced higher taxes on February shipments.

The contract for delivery in April advanced 1.2 percent to close at 2,475 ringgit ($804) a metric ton on the Malaysia Derivatives Exchange. Futures are heading for a 1.5 percent gain this month. Financial markets in Malaysia were closed yesterday.

Indonesia will raise taxes on crude palm oil exports to 9 percent for February from 7.5 percent in January, the Trade Ministry said yesterday. Malaysia has said it will maintain a zero-tariff policy for a second month in February to help clear record stockpiles of the oil that’s used in foods and fuels.

The Indonesian tax increase is “in favor of the Malaysian producers,” said Ryan Long, vice president of futures and options at OSK Investment Bank Bhd. in Kuala Lumpur. “We can expect higher exports in the month of February. They have lost their competitiveness.”

Shipments from Indonesia, including palm and kernel oils, dropped 4 percent to 1.9 million tons last month from 1.98 million tons in November as demand from China and Europe tumbled, according to data from the Indonesian Palm Oil Association today.

The record inventories of 2.63 million tons in Malaysia at the end of December may drop with a recovery in exports and expected decline in output, Long said. Production is typically lowest in January and February each year. The country is the second-largest producer.

Refined palm oil for delivery in September declined 0.2 percent to close at 7,014 yuan ($1,127) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month retreated 0.7 percent to end at 8,684 yuan a ton.

Soybeans for March delivery dropped 0.2 percent to $14.455 a bushel on the Chicago Board of Trade. Soybean oil for March delivery was little changed at 51.92 cents a pound.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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