Palm Oil Gains on Speculation Malaysia Exports to Rebound on Tax

By Ranjeetha Pakiam 

Palm oil advanced for the first time in four days on speculation that exports from Malaysia may climb this month after the government left a tax on shipments unchanged, potentially reducing stockpiles.

The contract for May delivery surged as much as 1.6 percent to 2,402 ringgit ($771) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,400 ringgit. Futures, which closed at the lowest level in almost three months yesterday, are poised to drop 2.2 percent this week.

Malaysia kept the export tax on crude palm oil at 4.5 percent for April as the reference price of 2,383.84 ringgit fell in the band for the minimum duty to be imposed, according to a Customs Department statement. The government said in October it would cut the levy to between 4.5 percent and 8.5 percent, from about 23 percent, from Jan. 1, to clear stockpiles. The duty for March was set at 4.5 percent, after keeping it zero in January and February.

“Stockpiles may fall a bit more by the end of this month,” said Ryan Long, vice president of futures and options at OSK Investment Bank Bhd. in Kuala Lumpur. “We’ll still have a chance to see improvement in the full month export figure because of the additional days” compared to February, he said.

Shipments 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, while inventories dropped to 2.44 million tons, the board said March 11. Reserves reached a record 2.63 million tons in December.

Soybean oil for May delivery climbed 0.6 percent to 49.65 cents a pound on the Chicago Board of Trade, while soybeans for May delivery gained 0.6 percent to $14.4425 a bushel.

Refined palm oil for delivery in September advanced 1.5 percent to 6,358 yuan ($1,022) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month climbed 1.1 percent to 8,094 yuan a ton.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur atrpakiam@bloomberg.net

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