05 February 2008 11:31 [Source: ICIS news]
By Jeremiah Chan
SINGAPORE (ICIS news)--Benchmark third-month crude palm oil futures traded on the Bursa Malaysia Exchange surged on worries that Indonesia, the world’s largest CPO producer, would increase CPO export taxes to mitigate rising food costs, market sources said on Monday.
April CPO futures were traded at ringgit (M$) 3,361/tonne ($1,041/tonne) at 5:44pm local time, off an intra-day record high of M$3,458/tonne earlier in the morning, according to the Bursa Malaysia.
The Indonesian government was considering a further hike in the CPO export tax to 15% if prices go above $1,100/tonne, after implementing an initial 5% tax in June 2007, and increasing it to 10% in September 2007, palm product buyers said.
Such rumours lent strength to CPO futures, which were already bullish after healthy soybean oil values on Monday evening.
March soybean oil futures on the Chicago Board of Trade closed at 56.76 cts/lb, up 164 points on speculative buying, traders said.
Oleochemical makers, who were already experiencing squeezed margins on the back of surging raw material costs, viewed the skyrocketing vegetable oil prices with dismay.
“There is no demand for [downstream] fatty acids at such high prices,” a source from a major oleochemical producer in the region said, adding that they had little choice but to increase their offers or lower production rates in the wake of the higher upstream numbers.
($1 = M$3.23)
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