Malaysia on Monday revealed that it would in April reintroduce an export tax on crude palm oil, at a rate of 4.5%, since when futures in the vegetable oil have tumbled by nearly 5% in Kuala Lumpur on ideas of reduced demand.<\/p>\n
“Indonesia may follow the example of Malaysia and reintroduce the export tax on crude palm oil soon”, Oil World said.<\/p>\n
Crude vs processed<\/p>\n
Such a move would stem Indonesia’s chance of boosting its share of the market for crude palm oil at Malaysia’s expense.<\/p>\n
However, it would reduce the risk of Malaysia stealing a march in processed palm oil products, an industry which has been hampered in both countries by the greater volumes of crude palm oil heading abroad.<\/p>\n
While Malaysian exports of crude palm oil have risen by 21% since it ditched its export levy in September, shipments of processed palm oil have fallen by 15%.<\/p>\n
The reintroduction by Indonesia of a levy on crude palm oil shipments would allow “its refining industry to compete on a level playing field with their Malaysian counterparts”, Oil World said.<\/p>\n
‘Lower the threshold’<\/p>\n
An Indonesian levy rise would likely be implemented by altering the target crude palm oil price above which the export duty kicks in, Oil World said.<\/p>\n
“Indonesia imposes an export tax on crude palm oil if world market prices exceed $ 750 a tonne, but in recent days prices in Rotterdam were below this benchmark at only around $660 a tonne,” the analysis group said.<\/p>\n
“There is now speculation that the Indonesian government may lower the threshold for the export tax.”<\/p>\n
Soyoil premium to narrow<\/p>\n
The report highlighted other threat to crude palm oil prices, warning that its discount to soyoil was likely to narrow even further.<\/p>\n
“Soyoil fell victim to the weakening energy markets yesterday, thus staying only at a small premium relative to palm oil,” a dynamic which “bodes well for a substitution of demand in favour of soyoil in a number of key vegetable oil-importing countries,” Oil World said.<\/p>\n
“From the fundamental perspective we consider it likely that soyoil prices will underperform those of palm oil” in the March-to-June period.<\/p>\n
Vegetable oils are linked to oil markets, which fell to a six-year low on Monday, through their use in making biodiesel.<\/p>\n
‘Virtually non-existent enforcement’<\/p>\n
There was some supportive news on biodiesel from Indonesia, where the government is moving to increase the compulsory blending rate of biodiesel into the fuel supply to 15% from 10%, in a measure intended to support palm oil prices and cut the bill for fossil fuels.<\/p>\n
However, Oil World downplayed the significance of this news, noting that “considering the virtually non-existent enforcement” of Indonesia’s existing biofuels targets, “the market largely ignored this input”.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
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