KUALA LUMPUR: Malaysian palm oil futures inched down on Wednesday as the strongest exports recorded for this year may do little to cut into high stocks at a time when output is surging in the world's second largest producer of the edible oil.
Cargo surveyor Intertek Testing Services data showed that Malaysian palm oil shipments climbed 10.9 percent to 1.6 million tonnes -- the highest this year, although stocks are set to hit another record beyond 2.48 million tonnes.
"Based on the shipment number, we will still end up with a higher stockpile because October's production is still very high," said OSK Research analyst Alvin Tai. "Exports rising higher month-on-month is not surprising, but the quantum still needs to be stronger."
By the midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange fell 0.3 percent to 2,494 ringgit ($816) per tonne.
Total traded volumes stood at 6,815 lots of 25 tonnes each, nearly half of the usual 12,500 lots.
Technicals showed that the bearish target of 2,379 ringgit per tonne for Malaysian palm oil has been adjusted to 2,468 ringgit based on its falling speed, said Reuters market analyst Wang Tao.
Palm oil dropped to a two-week low earlier this week after its biggest rival and top producer Indonesia planned to lower monthly export taxes in November after international prices fell this month.
The lower taxes will lift margins for Indonesians and shift demand away from competing Malaysian products.
Officials in Jakarta said they will not alter their tax structure which is aimed at driving its domestic palm oil downstream industry.
"The export tax structure is progressive and it has been adjusted to fluctuated palm oil prices in the international market," director general of agriculture-based industry Benny Wachjudi said at an industry meeting.
"It is very different from the Malaysian government's export tax policy.
I am sure Malaysian export tax policy will not last long because it is not adjusted to the development on palm oil prices in the international market."
Brent crude held steady near $109 a barrel on Wednesday after the huge storm Sandy whiplashed the US East Coast, reducing fuel demand even as refineries in the region gradually resumed operation.
US soyoil for December delivery inched up 0.3 percent in early Asian trade.
The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange rose 0.2 percent by the midday break.
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