Malaysia left the tax on crude palm oil exports unchanged for April as the world’s second-largest producer seeks to boost shipments and cut near record inventories. Futures in Kuala Lumpur rallied.
Shipments will be taxed at 4.5 percent next month, the same as this month, as the reference price was set at 2,383.84 ringgit ($762) a metric ton, within the minimum band for a levy to be applied, according to a Customs Department statement. The tariff was set at zero in January and February as the reference price was below the threshold that triggers the tax.
Malaysia said in October it would cut the export tax to between 4.5 percent and 8.5 percent from about 23 percent, to help trim record stockpiles and compete with Indonesia, the largest producer. Futures, which slumped to a three-year low of 2,217 ringgit on Dec. 13, have lost 29 percent in the past year because of falling demand.
“Palm oil investors are still counting on a seasonal drop off in production that could ease stocks and support prices,” Gnanasekar Thiagarajan, director at Mumbai-based Commtrendz Risk Management Services Pvt., wrote in a report today. “However, export data remains unimpressive so far. Malaysia’s move to keep the April CPO export tax rate unchanged may mean a tepid export demand trend in April.”
Shipments from Malaysia were little changed at 675,210 tons in the first 15 days of this month from 673,555 tons in the same period in February, surveyor Intertek said today.
Exports fell 14 percent to 1.4 million tons in February for a fourth monthly drop and output shrank 19 percent to 1.3 million tons, while inventories declined to 2.44 million tons, the Malaysian Palm Oil Board said March 11. Reserves reached a record 2.63 million tons in December. Indonesia raised export duty to 10.5 percent this month from 9 percent in February.
The contract for delivery in May climbed 2.1 percent to 2,414 ringgit on the Malaysia Derivatives Exchange, the biggest gain at close for the most-active price since Feb. 19. Futures dropped 6.3 percent in February.