Palm Oil Drops as Malaysian Shipments Seen Falling on Export Tax

Palm oil fell for the first time in four days on speculation that exports from Malaysia, the world’s second-largest producer, may decline for a fifth month as a tax on shipments curbs demand.

The contract for May delivery lost 1.6 percent to 2,411 ringgit ($776) a metric ton on the Malaysia Derivatives Exchange, the steepest drop at close since Feb. 26. Futures have lost 27 percent in the past year on rising global oilseed supplies and slowing demand.

Exports fell 14 percent to 1.4 million tons in February for a fourth monthly drop, according to the Malaysian Palm Oil Board. The government said in October it would cut the export tax to between 4.5 percent and 8.5 percent, from about 23 percent, from Jan. 1, to clear stockpiles. The duty for March was fixed at 4.5 percent after a zero rate in January and February as the base price in the first two months of the year was below the threshold that triggers the minimum tax.

“In March, we may see a decline in crude palm oil exports as well, as the 4.5 percent export tax came into effect and may deter price-sensitive buyers from countries like India,” Arhnue Tan, an analyst at Alliance Investment Bank Bhd., wrote in a report. “With production retreating further due to the seasonal downcycle, we expect further moderation in inventories, albeit at a slow rate.”

Output slumped 19 percent to 1.3 million tons last month, while inventories shrank to 2.44 million tons, the board said yesterday. Malaysian reserves reached a record 2.63 million tons in December. Shipments were little changed at 441,025 tons in the first 10 days of March from 440,830 tons in the same period in February, surveyor Intertek said yesterday.

Soybean oil for May delivery declined 0.7 percent to 50.09 cents a pound on the Chicago Board of Trade. Soybeans for May delivery retreated 0.9 percent to $14.6675 a bushel.

Refined palm oil for delivery in September dropped 1 percent to close at 6,510 yuan ($1,047) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month declined 0.6 percent to end at 8,154 yuan a ton.

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