Tuesday, 31 March 2015 16:47
JAKARTA: Malaysian palm oil futures edged down on Tuesday as traders took profits after a rally the day before and after Indonesia kept its palm oil export tax at zero for April.
By Tuesday’s close the benchmark June contract on Bursa Malaysia Derivatives was down 1.19 percent at 2,165 ringgit ($ 585) a tonne. Total traded volume stood at 35,441 lots of 25 tonnes, just above the daily average of 35,000 lots traded.
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Exports of Malaysian palm oil products in March rose 21.4 percent to 1.16 million tonnes from 953,053 tonnes shipped in February, cargo surveyor Intertek Testing Services (ITS) said on Tuesday.
According to cargo surveyor Societe Generale de Surveillance, Malaysian palm oil exports over the same period rose 14.8 percent to 1,140,355 tonnes from 993,376 tonnes shipped during February.
“Normally traders buy on rumours and sell on facts,” said a trader with foreign commodities brokerage, noting that the increase in Malaysian palm oil exports had earlier been factored into prices and that traders were concerned about Indonesia’s export tax remaining at zero.
The market is also focusing on Malaysia’s plans to implement a goods and services tax that is seen affecting shipments and sales of the edible oil in April.
“A lot of the plantations are pushing their products out this month. When it comes to April our exports are expected to be weak,” the trader said. “The GST will have a huge impact on our whole economy.”
While palm oil itself is exempt from the GST, exporters and traders will need to apply for tax refunds from customs, potentially reducing their operations’ liquidity, he said.
“From crude to the refinery they can claim back, but the process and duration for claims is unknown.”
Golden Agri-Resources Ltd, the world’s second biggest oil palm planter by acreage, expects its palm and palm kernel oil production to rise around 5 percent this year, coming in at the lower end of a projected annual growth rate as dry weather hurts yields, potentially providing some price support.
In other vegetable oils, the US soyoil May contract slipped 0.56 percent during late Asian trading, while the most active September soybean oil contract on the Dalian Commodity Exchange lost 0.74 percent.
Brent crude oil dropped towards $ 55 a barrel on Tuesday as Iran and six world powers entered a final day of talks over a nuclear deal that could see the energy-rich country increase oil exports to world markets.
Copyright Reuters, 2015
