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Palm oil advanced to the highest level in two weeks on speculation that a cut in export taxes will reduce record stockpiles in Malaysia, the second-biggest producer after Indonesia.
The contract for delivery in April climbed as much as 1.7 percent to 2,461 ringgit ($810) a metric ton on the Malaysia Derivatives Exchange, the highest level for the most-active contract since Jan. 7. Futures were trading at 2,448 ringgit at 12:01 p.m. in Kuala Lumpur.
Inventories will drop 16 percent to 2.2 million tons by March, the most since 2010, after tariffs were reduced to zero this month, according to the median of six analyst and trader estimates compiled by Bloomberg. Futures will rally to 2,800 ringgit by the end of this quarter, the median of 13 estimates shows. The country will maintain the zero tariff on crude palm oil shipments through February to draw down the stockpiles, which stood at an all-time high of 2.63 million tons in December.
“Since February’s export tax still remains zero, it’s likely to attract more CPO exports,” said Donny Khor, associate director for futures and options at OSK Investment Bank Bhd. in Kuala Lumpur, referring to crude palm oil by its initials. “This should reduce” reserves, he said.
Production in January may be about 16 percent to 17 percent lower than the 1.78 million tons a month earlier and February output is expected to dip further, said Khor. Output is usually lowest in the first two months of the year.
Refined palm oil for delivery in May rose 0.7 percent to 6,796 yuan ($1,093) a ton on the Dalian Commodity Exchange. Soybean oil for September was unchanged at 8,846 yuan a ton.
Soybeans for March delivery gained 0.8 percent to $14.41 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March climbed 0.9 percent to 52.13 cents a pound.
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