Palm oil dropped the most in a week, snapping a four-day rally, on speculation that shipments from Malaysia may drop after Indonesia cut export taxes.
The contract for July delivery declined 1.7 percent to close at 2,277 ringgit ($751) a metric ton on the Bursa Malaysia Derivatives, the most since April 22. Futures gained 0.9 percent last week, the first advance since the five days ended March 22.
Indonesia, the world’s largest producer, cut the tax on crude palm oil exports to 9 percent in May from 10.5 percent this month, Bachrul Chairi, director general for foreign trade at the Trade Ministry, said April 26. Malaysia will keep the tax unchanged at 4.5 percent. Exports from Malaysia increased 2.7 percent to 1.08 million tons in the first 25 days of this month from the same period in March, surveyor Societe Generale de Surveillance said April 25.
“Malaysia may lose out on the export tax front,” said Ker Chung Yang, an analyst at Phillip Futures Pte. in Singapore. “Export numbers for the next couple of months are going to be not that impressive. The high stockpile story is going to haunt us again.”
Reserves have dropped 17 percent to 2.17 million tons in March from a record 2.63 million tons in December, according to Malaysian Palm Oil Board data. That’s still 11 percent higher than the 1.96 million tons in March 2012.
“The underlying trend is weak because stocks continue to be high,” said Gnanasekar Thiagarajan, a Mumbai-based director at Commtrendz Risk Management Services Pvt. “Although exports showed some recovery, it’s very minor, it’s not enough to make a dent in stocks.”
Soybean oil for July delivery dropped 0.6 percent to 49.27 cents a pound on the Chicago Board of Trade, while soybeans advanced 0.2 percent to $13.835 a bushel.