20/06/2012 (LoanSafe) - Thailand’s Foreign Trade Department is planning to extend the temporary duty on exports of crude palm oil to ensure an adequate supply and stable price in the domestic market.

“The export tariff will prevent domestic producers from selling large quantities of palm oil overseas amid its rising price in the world market,” director-general Manus Soiploy said yesterday.

The export duty of 10 baht (US$.31) per kilogram expires this month, but might be renewed for three more months to keep the domestic supply of palm oil stable.

The measure was introduced early this year after the domestic price of palm oil skyrocketed during the off-harvest season.

The gap between the controlled domestic price and the higher price abroad has encouraged palm-oil exports to neighbouring countries.

However, a source from the palm-oil refining industry opposes the government’s plan to extend the tax, saying the price of palm nuts has dropped gradually during the harvest season that started last month.

The government should allow unrestricted exports of palm oil, as limiting the volume would cause the price of palm nuts to fall and hurt farmers’ income, the source said.

“The [retail] price of palm oil is now under control by the government at 42 baht ($1.3) per litre bottle. Thailand still has a huge buffer stock of more than 200,000 tonnes of palm oil. The country no longer needs to limit export volume,” the source said.

There might be some hidden political agenda if the government decides to extend the measure, the source said.

Most oil-palm plantations are in the South, which is a support base of the main opposition party, so the government may not be highly concerned about the price of palm nuts, the source said.

According to the Commerce Ministry’s Internal Trade Department, the price of palm fruit rose by 1.6 per cent during the first 15 days of this month from the last 15 days of May.

The price of palm oil has also increased by 1 per cent, while the global price of palm oil, quoted in Malaysia, fell by 4 per cent because of the crop entering the market in the current harvest season. (Source: Petchanet Pratruangkrai Asia News Network (MCT))