Palm Oil Little Changed as Tax Proposal Counters Price Forecast
Palm oil closed little changed as speculation that Malaysian shipments may increase after a proposed export-tax cut countered a bearish price prediction from Dorab Mistry, director of Godrej International Ltd.
The contract for December delivery ended at 2,352 ringgit ($769) a metric ton on the Malaysia Derivatives Exchange. Futures swung between gains of 2.3 percent and losses of 1.3 percent. Prices are heading for a 7.6 percent drop this week.
A plan to cut export taxes on crude palm oil to between 8 percent and 10 percent from 23 percent will be presented to the Malaysian cabinet tomorrow, said Plantations Industries and Commodities Minister Bernard Dompok yesterday. Unused duty-free export quota will be redistributed, he said.
The tax cut “would help boost exports of CPO, reducing stockpiles and cushioning prices from falling further,” Chye Wen Fei, an analyst at Hong Leong Investment Bank Bhd., wrote in a report today, referring to crude palm oil.
Futures declined earlier after Mistry said the bounce probably wouldn’t last and the market would decline to $749 a ton for cargoes delivered in Rotterdam. The price was $800 in Rotterdam yesterday, data compiled by Bloomberg show.
Indonesia will maintain its export-tax policy, Deputy Trade Minister Bayu Krisnamurthi told reporters in Jakarta today. The country reduced taxes last year to boost shipments of processed oil, increasing competition for Malaysia.
Palm oil has plunged 22 percent since the end of August as the global slowdown hurt demand for the oil used in everything from candy to biofuel amid an increase in production in Indonesia and Malaysia.
Stockpiles in Malaysia may have jumped to 2.6 million tons at end-September, Ivy Ng, an analyst at CIMB Group Holdings Bhd. (CIMB), said yesterday. Inventories reached an all-time high of 2.27 million tons in November 2008, said the Malaysian Palm Oil Board. The agency is set to release September data on Oct. 10.
Soybean oil for December delivery climbed 0.5 percent to 50.96 cents a pound on the Chicago Board of Trade. Soybeans for November delivery gained 0.8 percent to $15.445 a bushel.
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