Malaysia keeps palm oil export tax unchanged to spur shipments

Peak production to last at least until April. — Reuters file pic
Peak production to last at least until April. — Reuters file pic

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KUALA LUMPUR, Sept 17 — Malaysia, the world’s second-largest producer of palm oil, left the tax on exports of crude palm oil unchanged for an eighth month to encourage shipments and prevent a build-up in stockpiles during the peak output season.

Cargoes will be taxed at 4.5 per cent in October after the reference price was set at RM2,306.11 (US$709) tonne, according to a Customs Department statement. The tariff was zero in January and February before rising to 4.5 per cent in March.

Exports from Malaysia climbed for a third month in August as a weaker ringgit and a rally in soybeans, which can be crushed to yield an alternative, boosted demand from importers. Prices of the oil used in everything from candy to detergents will extend declines as supply from Indonesia and Malaysia increases and biodiesel demand peaks, according to Dorab Mistry, director at Godrej International Ltd.

“Malaysian crude palm oil is more competitive than Indonesia’s,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur. “Exports will be smooth because people are not holding back in anticipation of any changes.”

Malaysia said in October it would cut the tax to between 4.5 per cent and 8.5 per cent from about 23 per cent to trim stockpiles and compete with Indonesia, the biggest producer. Indonesia cut its export tax on crude palm oil to 9 per cent this month.

Production in Malaysia rose 3.6 per cent to 1.74 million tonnes last month, according to the palm oil board. Trees were in a more productive cycle, which would last at least until April, Mistry said on September 12. Shipments rose 14 per cent to 732,412 tonnes in the first 15 days of September from 644,589 tonnes in the same period in August, Intertek said today. — Bloomberg

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