Malaysian palm oil futures were little changed on Wednesday as investors grew uncertain over the implementation of Indonesian palm levies and whether they could effectively fund biodiesel subsidies in the world's top producer. The regulation will require exporters in Indonesia to pay a tax of $50 per tonne of crude palm oil and $30 for processed palm oil product shipments. The proceeds will be used to fund ambitious biodiesel mandates that are slated to soak up supplies of the tropical oil.
But repeated delays in the introduction of a levy on palm oil shipments from Indonesia are frustrating traders, who find it hard to set prices, and have raised doubts over whether the levy would be successful in generating planned biodiesel subsidies. The levy was initially due to be introduced in the fourth week of May, but after several rounds of delays to the start up of the public body that will collect the levy, Indonesia said this week the regulation will kick in on July 1.
"The market is very dull because people are confused about the levy," said a trader with a foreign commodities brokerage in Kuala Lumpur. "People are doubting how effective the biodiesel mandate is going to be." The September palm oil contract on the Bursa Malaysia Derivatives exchange ended flat at 2,291 ringgit ($609.80) a tonne on Wednesday. Prices were stuck in rangebound trade between 2,280-2,303 ringgit.
Total traded volume stood at 41,697 lots of 25 tonnes each, above the usual 35,000 lots. Indonesia's exports of palm and palm kernel oils for May eased 1 percent from a month earlier to 2.215 million tonnes, the Indonesian Palm Oil Association (GAPKI) said in a statement on Tuesday. In vegetable oil markets, the US July soyoil contract rose 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 0.9 percent.
Comments
Comments are closed.