KL palm oil down on Indonesia tax news

KL palm oil down on Indonesia tax news

KUALA LUMPUR (Reuters): A late sell-off dragged down Malaysian palm oil futures at the close on Wednesday, despite an initial rally triggered by expectations of more buying from China after it released the import quota for this year, traders said.

The new benchmark third-month April futures contract was down two ringit at 823 ringgit (US$216.57) a ton after trading as high as 833 ringgit.

Volume was 1,329 lots compared with 1,758 lots at the close on Tuesday.

"The palm oil quota is already out and (importers) will get the licenses after the Chinese New Year. This means the Chinese will have to buy from us or Indonesia in the next few days," said one trader in Kuala Lumpur.

"Some people who have interest in China tried to hold the futures market so that they can get better prices from the Chinese," he added.

But the trader said the news from Indonesia, the second largest palm oil producer after Malaysia, later pulled down prices.

Trade sources in Malaysia said China issued on Tuesday the first batch of palm oil import quotas for the year.

Indonesia's Trade and Industry Minister Luhut Pandjaitan on Wednesday said an export tax on CPO and its derivatives would be abolished.

Pandjaitan said the decision was taken at a meeting of economic ministers, and would take effect once the Finance Ministry had issued a regulation on the issue. Pandjaitan said he hoped it would be effective by February 1.

Physical January (south) crude palm oil was offered at 745 ringgit a ton against bids of 735, and trade was done at 735. January (central) saw offers at 760 ringgit a ton against bids of 755 and trade at 750.

February (south) was offered at 775 ringgit against bids of 770 and trade at 765 to 780. February (central) saw offers at 780 against bids of 775 and trade at 775.

Among refined products, February RBD palm oil was offered at $220 a ton FOB and March at $227.50.

There were offers for February RBD olein at $227.50 and March at $235.

January RBD palm stearin was offered at $195, and January palm fatty acid distillate at $180.