Crude palm oil exports from Malaysia, the world’s largest producer after Indonesia, will be taxed in March for the first time in three months. Futures in Kuala Lumpur dropped.
Shipments will be taxed at 4.5 percent next month as the reference price was set at 2,306.11 ringgit ($745) a metric ton, which is in the minimum band for a levy to be applied, according to a Customs Department statement on the Malaysian Palm Oil Board website.
Malaysia said in October it would cut the export tax to between 4.5 percent and 8.5 percent, from about 23 percent, to help trim record stockpiles and compete with Indonesia. The tariff was set at zero in January and extended to this month as the base price was below the threshold of 2,250 ringgit a ton that triggers the tax. Indonesia has set an export duty of 9 percent this month.
“As long as the duty in Indonesia is higher than in Malaysia, I think we have the competitive edge,” Mohammad Jaaffar Ahmad, chief executive officer of the Palm Oil Refiners Association of Malaysia, said by phone. “I don’t think it’s going to be detrimental to the plantations as well as refiners because there is ample supply of CPO,” he said, referring to crude palm oil by its initials.
The contract for delivery in April fell as much as 0.4 percent to 2,485 ringgit on the Malaysia Derivatives Exchange, erasing gains of as much as 1 percent. Futures rallied 4.9 percent in January, extending a 2.9 percent advance in December.
Palm oil shipments from Malaysia increased 18 percent in the first 15 days of this month to 673,555 tons from 570,510 tons in the same period in January, Intertek said today. A separate estimate of 15-day shipments from Societe Generale de Surveillance is due later today.