Currency and tax factors key in Asian palm oil market<\/p>\n
KUALA LUMPUR (Reuters): Malaysia's palm oil market will be
\ndominated by the performance of the ringgit again this week,
\nwhile the Indonesian market is likely to see less business
\nbecause of an unpopular tax.<\/p>\n
Traders in Asia's two main palm oil producing countries said
\nlast week that there were insufficient factors to boost prices of
\nthe commodity, other than speculation.<\/p>\n
\"The ringgit will continue to be the baton for our market in
\nthe near-term; the more it falls, the more the chance for our
\nprices to go up,\" said a trader in Kuala Lumpur on Friday.<\/p>\n
Indonesian traders said their market had been affected by the
\ngovernment's imposition of an additional export tax on palm oil.
\n\"We expect the trend to continue next week,\" said a trader in
\nMedan, north Sumatra, on Friday.<\/p>\n
In Malaysia last week, the weakening of the ringgit to 3.85 to
\nthe dollar on Friday from Thursday's 3.79, and a tender for 6,000
\ntons of palm olein by India, resulted in frantic buying of palm
\noil.<\/p>\n
The rally saw the benchmark March futures close 48 ringgit
\nhigher at 1,985 ringgit ($515.58) a ton, just two ringgit off the
\nlimit-up of 50 ringgit allowed in any single trading session of
\nthe Malaysian market.<\/p>\n
Traders, however, could not say if the momentum could be
\nretained this week, and whether the March contract would breach
\nthe 2,000 ringgit psychological level.<\/p>\n
India's State Trading Corporation also passed at its tender on
\nlate Friday for the palm olein, meant for December\/January
\nshipment.<\/p>\n
\"Unless the ringgit falls again, let's say to 3.9 or 4.0 (to a
\ndollar), it looks like a serious correction or profit-taking will
\ntake place (in palm oil prices) Monday,\" said another trader in
\nKuala Lumpur.<\/p>\n
Indonesian traders said they expected a quiet market,
\nfollowing the imposition of the new export tax.<\/p>\n
Indonesia's Industry and Trade Minister Tungky Ariwibowo said
\non Thursday that an additional export tax of between 28 and 30
\npercent would be levied from December 19 on palm oil producers
\nwho failed to supply 80 percent of their output to the local
\nmarket.<\/p>\n
The move was aimed at stabilizing domestic prices which have
\nrisen sharply due to the fall of the rupiah against the U.S.
\ndollar, the minister said.<\/p>\n
\"Demand was usually high ahead of the Christmas celebrations,
\nbut the imposition of taxes to discourage export and stabilize
\ndomestic prices has made players rather reluctant to do business
\nthis year,\" said an Indonesian trader.<\/p>\n
Reacting to the unpopular tax, Indonesian palm olein closed at
\n2,350-2,400 rupiah\/kg in Jakarta on Friday, after opening at
\n2,500 rupiah\/kg.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/currency-and-tax-factors-key-in-asian-palm-oil-market-1447893297",
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