Palm oil rallied to the highest level in more than three months on speculation that Malaysian stockpiles may drop from a record as a zero export tax lures buyers away from Indonesia, the world’s largest producer.

The contract for delivery in April climbed as much as 1.8 percent to 2,562 ringgit ($825) a metric ton on the Malaysia Derivatives Exchange, the highest price for the most-active contract since Oct. 25, before trading at 2,557 ringgit at 12:22 p.m. in Kuala Lumpur. Futures, 4.6 percent higher in January, are heading for the biggest monthly advance since March.

Malaysia will maintain the zero-tariff policy for a second month in February to help clear stockpiles of the oil used in foods and fuels, while Indonesia, the biggest producer, will raise taxes on crude exports to 9 percent for February from 7.5 percent, the Trade Ministry said Jan. 28. Exports from Malaysia climbed 11 percent to 1.46 million tons in January from a year earlier, according to data from surveyor Intertek today.

“The zero export duty for crude palm oil should help Malaysian shipments,” Alvin Tai, an analyst at OSK Investment Bank Bhd., said by phone in Kuala Lumpur. The pick-up in exports and an expected double-digit drop in production this month, will help reduce stockpiles, he said.

While Malaysia’s exports fell 7 percent in January compared with December, the extent of the decline narrowed as the month progressed, Intertek data showed. In the first 15 days of the month, shipments had been down 21 percent. Inventories reached a record of 2.63 million tons at the end of December, according to the Malaysian Palm Oil Board. Production is typically lowest in January and February each year.

Refined palm oil for delivery in September advanced 0.7 percent to 7,120 yuan ($1,145) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month increased 0.9 percent to 8,808 yuan a ton.

Soybeans for March delivery lost 0.2 percent to $14.76 a bushel on the Chicago Board of Trade, while soybean oil for March delivery was little changed at 52.53 cents a pound.

Source: Bloomberg

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