2021-06-22 14:28:00
VEGOILS-Palm erases early gains to end flat on Indonesia's export levy change
• Market concerned over rise in output -traders
• Indonesia's new levy structure weighs
• Malaysia surpasses Indonesia as India's top palm supplier
KUALA LUMPUR, June 22 - Malaysian palm oil futures surrendered early gains to end little changed on Tuesday, dragged by expectations of rising production and Indonesia's plan to revise its palm oil export levy.
The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange closed down 1 ringgit, or 0.03%, at 3,390 ringgit ($815.00) a tonne.
Top producer Indonesia on Monday announced that it would change the levy structure for palm oil exports, cutting the ceiling rate for crude palm oil levies to $175 per tonne from $255.
The move is expected to improve profit margins for exporters, Indonesia Palm Oil Association (GAPKI) said, although other groups felt the frequent changes in rules were hurting demand.
Indonesia's lofty taxes has led to Malaysia surpassing it as the biggest crude palm oil exporter to top consumer India in 2020/21, industry officials told Reuters.
The palm oil contract was also pressured by concerns over rising inventories due to a faster pace of production growth in Malaysia, traders said.
The contract had earlier risen to an intraday high of 3.2%.
"Palm oil prices rose in line with much improved Chinese import margins for Q4 2021 and Q1 2022 following the recent reversal, as well on expectations for much improved demand over the third quarter this year," said Marcello Cultrera, institutional sales manager & broker at Phillip Futures in Kuala Lumpur.
The contract has declined 13% so far this month.
Dalian's most-active soyoil contract DBYcv1 rose 2%, while its palm oil contract DCPcv1 gained 1.7%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 1.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market
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