Palm Oil Prices Drop as High Output and Low Tax

Palm oil prices drop as output rising and low tax make export increase of the commodity in Indonesia. Shipments may advance to 1.6 million metric tons this month after gaining an estimated 1.4 percent to 1.4 million tons in August from July. While output may have dropped to 1.9 million tons last month from an estimated 2 million tons in July, it will rise to 2.1 million in September. The executives didn’t provide forecasts for inventories.

Palm oil futures dropped 0.7 percent to close at 2,927 ringgit ($941) a ton on the Malaysia Derivatives Exchange today, the lowest price at close since Aug. 16. Soybeans, crushed to produce a rival oil, reached a record $17.89 a bushel on the Chicago Board of Trade on Sept. 4. Soybean oil was $315.38 a ton more costly than palm.

Palm oil in Malaysia, the benchmark price in the second- largest producer, has lost 7.8 percent this year even as soybeans in Chicago rallied to an all-time high on damage from a drought in the U.S. Stockpiles in Indonesia may total 4 million tons, twice as much typically estimated, according to Godrej International Ltd., which forecast a rise in Malaysian reserves to a record. That may cut prices and hurt profits at companies such as Golden Agri-Resources Ltd. (GGR), the second-biggest planter.