Crude Palm Oil Ends Flat; Decision on CPO Export Tax in Focus

Crude palm oil futures on Malaysia’s derivatives exchange ended little-changed Thursday after a choppy session, as investors await a decision from the government on a proposal to cut the export tax on crude palm oil.
The benchmark December contract at Bursa Malaysia Derivatives ended nearly unchanged at 2,352 ringgit a ton, after moving both ways.
Malaysia's Commodities Ministry may cut export taxes on crude palm oil to help local palm oil processors remain competitive and boost shipments, a ministry official said.
Commodities Minister Bernard Dompok on Friday will present the cabinet with a proposal to cut the tax to 8%-10% from 23% currently, an aid to the minister said in a text message Wednesday.
A lower tax rate would make CPO shipments less "prohibitively expensive," OSK Investment Bank said in a note.
"Upstream planters now have an alternative to ship CPO by themselves, as a last option, if they are unable to sell to refiners," the bank said.
The move could help Malaysian refiners regain market share lost to Indonesian competitors after Indonesia cut its export tax last year, the bank said.
It could also help draw down palm oil inventories in Malaysia, widely tipped to have risen to a record high of 2.40 million-2.50 million tons in September.
In the cash market, refined palm olein for October was offered at $785/ton, while cash CPO for prompt shipment was offered at MYR2,190/ton.
Open interest on the BMD was 164,431 lots, versus 181,876 lots Wednesday. One lot is equivalent to 25 tons.
A total of 33,333 lots of CPO were traded versus 50,577 lots Wednesday.

Ending BMD Crude Palm Oil (CPO) futures prices in MYR/ton: 

Month   Close  Previous  Change   High    Low
Oct12  2,189     2,183      +6  2,205  2,189
Nov12  2,275     2,269      +6  2,307  2,236
Dec12  2,352     2,351      +1  2,404  2,321
Jan13  2,438     2,439      -1  2,491  2,400 

Write to Shie-Lynn Lim at shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
October 04, 2012 07:27 ET (11:27 GMT)
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