Crude palm oil exports from Malaysia may be allowed at zero duty for a third month in March if prices remain below the threshold for the tax to be imposed, Plantation Industries & Commodities Minister Bernard Dompok said.
“We’re steering into a third month of duty-free exports of CPO” as the threshold of 2,250 ringgit ($725) a metric ton has not been reached, Dompok said in Putrajaya today, referring to crude palm oil by its initials. “If prices for the whole month don’t reach 2,250 ringgit, then it will be the same.”
The Malaysian government said in October it would cut the export tax on palm oil to between 4.5 percent and 8.5 percent, from about 23 percent, effective from Jan. 1. The tariff for January and February was set at zero as the base price was below the threshold of 2,250 ringgit a ton that triggers the 4.5 percent rate. The second-largest producer is seeking to reduce record stockpiles and boost competition with Indonesia, the biggest producer, which raised taxes on crude exports to 9 percent for February from 7.5 percent.
Inventories reached a record 2.63 million tons in December, according to the Malaysian Palm Oil Board. There are signs that stockpiles are easing, Dompok said today. Exports are also expected to improve, he said.
The contract for delivery in April climbed 0.4 percent to close at 2,566 ringgit a ton on the Malaysia Derivatives Exchange, the highest price for the most-active contract since Oct. 25. Futures have gained 5.3 percent this year.