JAKARTA: Malaysian palm futures dropped more than 4 per cent by mid-day today amid worries that buyers will seek palm oil from rival Indonesia after Jakarta scrapped a tax on palm oil exports, traders said.
Indonesia’s finance minister said yesterday the export tax on crude palm oil had been cut to zero per cent, as part of a package of measures intended to shore up confidence in financial markets.
“News from Indonesia is going to be closely monitored. That’s bearish news for us because buyers will import more from Indonesia,” a trader at a Kuala Lumpur-based brokerage firm said.
The benchmark January contract on the Bursa Malaysia Derivatives Exchange dropped RM60, or 4.11 per cent, to RM1,399 (US$399) a tonne by mid-day.
The January contract hit a low of RM1,331 per tonne yesterday, the weakest since mid-August 2005.
Contracts of other traded months dropped between RM39 and RM67. The overall volume stood at 2,962 tonnes.
The Indonesian government had previously set a 2.5 per cent tax rate for palm oil exports in November, down from 7.5 per cent for October.
Indonesia, the world’s top producer of palm oil — which is used in a wide range of products from soap to biodiesel - is forecast to produce 18.6 million tonnes of crude palm oil this year, compared with 17.2 million tonnes in 2007.
Apart from news on Indonesian tax, lower crude oil prices are also adding to the negative tone for palm markets, a trader at a Malaysian commodity brokerage said.
US crude futures were up US$1.71, or 2.73 per cent, to US$64.44 a barrel at 0511 GMT in Asian trading, off a high of US$66.71 earlier.
The most active December soybean oil rose 0.54 cents, or 1.69 per cent, to 32.42 cents per lb.
In the physical market, Malaysian palm oil for October and November delivery stood at RM1,400/1,420 a tonne in the southern and central region.
Trades were done at RM1,420-RM1,440 in the southern region and RM1,410-RM1,440 a tonne in the central region. - Reuters
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