Crude palm oil futures on Malaysia’s derivatives exchange ended higher
Thursday, as stockpiles in Malaysia likely eased amid a seasonal drop in
production, spurring investors to cover short positions.
The benchmark May contract at Bursa Malaysia Derivatives ended 1.4% higher at
2,433 ringgit a metric ton after moving in a MYR2,384-MYR2,442/ton range.
Palm oil production tends to bottom out during the February-March period and
could mean further declines in stockpiles over the next few months, a
commodities broker at a foreign brokerage said.
Output of the tropical oil, used to make a wide variety of consumer products
ranging from chocolates to lipsticks, generally dips during the November-March
period before yields improve in the second half of the year.
Palm oil's improving appeal as feedstock for biodiesel, brought on by CPO's
discount to Brent crude oil, provided the catalyst for gains during afternoon
trade.
Improving shipments for CPO in the coming months will likely stem from the
energy and transportation sectors, Ong Chee Ting, analyst at Maybank Investment
Bank, said in a report.
He also noted that Malaysia's move to revamp its export tax policy on CPO "is
key to restoring Malaysia's export competitiveness this year" and expects palm
oil to strengthen in the first half of 2013.
Malaysia, the world's no. 2 palm oil producer, said last October that it
would slash export taxes on the crude grade from 23% to between zero and 8.5% to
ease inventories. The tax rate for this month is set at 4.5%.
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