KUALA LUMPUR: Malaysian reserves climbed for a fifth month in November to 2.28 million tons, the highest level since February 2013. Indonesia kept its export tax at zero for a third month in December, and may extend the exemption to January, according to Derom Bangun, chairman of the Indonesian Palm Oil Board.
Any extension of Malaysia’s tax waiver will help make the country’s palm oil competitive against Indonesia’s as well as against other edible oils, Franki Anthony Dass, Executive Vice-President of the plantation division at Sime Darby Bhd.
Palm oil exports from Malaysia, the world’s largest producer after Indonesia, will remain duty-free for a sixth month as the government seeks to boost shipments and reduce inventories to support prices.
The export tax exemption will last until Feb. 28 as a temporary measure to help cushion the impact of declining crude palm oil prices on the plantation industry, including smallholders, Douglas Uggah Embas, Plantation Industries and Commodities Minister, said on Dec. 19. Shipments will be duty-free in January as average prices stay below a threshold for a tax to be imposed, the government said on Dec. 16.
Palm entered a bull market last month after top producers Indonesia and Malaysia scrapped export taxes to boost demand and reverse a slump in prices. The tropical oil used in food and biofuels is still heading for a third annual loss in four years as a slump in crude oil prices and a global glut in cooking oils curb demand.
“The weakness in the global vegetable oil market has affected palm oil prices which have averaged below 2,500 ringgit,” Uggah said. “The decline in palm oil prices has affected the income of plantation owners and smallholders.”
Futures increased 0.2 percent to 2,157 ringgit ($618) a metric ton on the Bursa Malaysia Derivatives today. Prices closed at 2,336 ringgit on Nov. 3, more than 20 percent above the 1,929 ringgit settlement on Aug. 29, meeting the common definition of a bull market. The commodity has lost 19 percent this year and averaged about 2,402 ringgit.