Malaysia left the tax on crude palm oil exports unchanged for a fourth month in June as the world’s second-largest producer seeks to increase shipments and trim inventories amid a decline in prices. Futures fell.
Shipments will be taxed at 4.5 percent next month as the reference price was set at 2,332.02 ringgit ($777) a metric ton, within the minimum band for a levy to be applied, according to a Customs Department statement. The tariff was zero in January and February before being raised to 4.5 percent in March.
Futures plunged 29 percent in the past year as production outpaced demand, boosting inventories in Malaysia to a record in December. The Malaysian government said in October it would cut the export tax to between 4.5 percent and 8.5 percent from about 23 percent to help trim the stockpiles and compete with Indonesia, the largest producer.
“The tax was within market expectations as price had been hovering within that tax bracket,” Chandran Sinnasamy, head of trading at LT International Futures Sdn., said by phone from Kuala Lumpur. “Exports from Malaysia will not receive much help from the tax being kept unchanged as Indonesia is more competitive.”
Exports from Malaysia fell 7.6 percent to 599,300 tons in the first 15 days of this month, surveyor Intertek said today. Shipments dropped 5.6 percent to 1.45 million tons in April, while inventories declined 11 percent to 1.93 million tons, the Malaysian Palm Oil Board said May 10.
Indonesia cut its export duty to 9 percent this month from 10.5 percent the previous month.
The July-delivery contract dropped as much as 1.1 percent to 2,277 ringgit a ton on the Malaysia Derivatives Exchange, and was at 2,280 ringgit at 11 a.m. in Kuala Lumpur. Futures fell 3.9 percent in April, falling for a third month.
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Source : Bloomberg