Malaysian palm oil slips

Malaysian palm oil slipped on Thursday after top producer Indonesia cut its export tax for next month, potentially attracting orders away from Malaysia. Palm oil exports from Malaysia, the No 2 supplier, have lagged since December, when higher prices in the first quarter discouraged purchases. Further declines in exports as output recovers could boost stocks and pressure prices.
Indonesia is to cut its export tax on crude palm oil in May to 17.5 percent from 22.5 percent this month as international prices have consistently fallen. "There is no real impetus for palm oil to go much higher," said a trader in Kuala Lumpur. "Indonesia's changes to the export tax will take away demand from Malaysia and the benchmark here will fall. The stronger ringgit is not helping either."
Benchmark July crude palm oil contract on Bursa Malaysia Derivatives Exchange fell 0.1 percent to settle at 3,312 ringgit ($1,098) a tonne. The July contract on Wednesday hit a one-week high of 3,336 ringgit - a level unseen since April 14. Technicals are positive. Reuters analysis shows palm oil will rise to 3,362 ringgit per tonne, based on its wave pattern a Fibonacci retracement analysis.
Trading volumes were light, with 20,020 lots of 25 tonnes each, compared to the usual 25,000 lots, as refiners waited on the sidelines due to the stronger ringgit currency that will cut into margins. The ringgit strengthened to a near 14-year high on Wednesday, which makes Malaysian crude palm oil priced in the currency more expensive to process. The ringgit traded at 3.0070 per dollar on Thursday.
"And now with demand slow, the margins are worse. The refiners will take in less to process for the export markets," said another Malaysian trader. Vegetable oils were firmer in Asian hours, lifted by stronger crude oil markets. US soyoil for May delivery edged 0.1 percent higher although there could be some pressure from higher supplies from South America and slowing Chinese demand. The most active January 2012 soyoil contract on China's Dalian Commodity Exchange ended slightly higher.