CPO Prices May Continue To Fall As Malaysia Revokes Export Duty Exemption

JAKARTA March 17 2015 – Malaysia has decided to revoke the exemption of palm export tax amid the falling crude palm oil prices at 7.69% this month. As a result the pressures to CPO demand will increase this year.

Dedy Yusus Siregar the Analyst of PT Fortis Asia Futures said crude palm oil (CPO) prices may continue to fall after Malaysia revokes the exemption of palm export duty. The policy would increase the pressures to CPO prices this year.

“There are previously several factors that press CPO prices including the soybean supply in the United States which grows by 35% this year India which will apply import duty for CPO and unimproved economy in China” told Dedi to Indonesia Business Daily Monday (3/16/2015).

Malaysia decided to revoke the exemption of CPO export duty at 4.5% after the average monthly prices had exceeded the determined floor price. In the meantime Indonesia has not indicated to impose export tax for CPO.

The exemption of CPO export tax from two major palm producers in the world Indonesia and Malaysia has been considered less effective. Malaysia which has performed the policy since October 2014 only took the benefit of export increase in the first month when the policy was applied.

The similar thing was also experienced by Indonesia. Since November 2014 the exemption of export duty only boosted the export in the first month. In the following months the export of CPO by Malaysia and Indonesia continued to fall.

In February 2015 the Indonesia’s CPO export fell by 6.07% into 117 million tons from 181 million tons in the previous month while the palm export of Malaysia in the same month dropped by 10.4% into 993330 tons from 11 million tons in January 2015. Read more..