Malaysia, the world’s second-largest producer, increased the tax on exports of crude palm oil after keeping it unchanged since March. Prices entered a bull market on Nov. 1.
Cargoes will be taxed at 5 percent in December, according to a Customs Department statement on the Malaysian Palm Oil Board website. The reference price was set at 2,452.43 ringgit ($765) a metric ton. The tariff was zero in January and February before rising to 4.5 percent in March. Indonesia last month set its export tax at 9 percent for November.
“Because of the slight increase in export duty which will come into effect in December, it might stimulate short-term demand in the spot market in order to enjoy the 4.5 percent now,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “The short-term increase in demand should bode well for the spot market and probably flow to the futures market as well.”
Futures for delivery in January rose as much as 1.2 percent to 2,620 ringgit on the Malaysia Derivatives Exchange after the export tax was announced. Palm rose to 2,628 ringgit on Nov. 1, the highest close since September 2012 and 21 percent more than the 2,167 ringgit settlement on July 29, meeting the common definition of a bull market.