MARKET DEVELOPMENT
Indonesia, Malaysia Seen Keeping Crude Palm Exports Duty-free in Jan
Indonesia, Malaysia Seen Keeping Crude Palm Exports Duty-free in Jan
* Weak palm prices point to zero tax for CPO exports in January
* Malaysia could exempt duties through Q1 2015
11/12/2014 (Reuters) - Indonesia and Malaysia, the world's top palm growers, will probably keep shipments of crude palm oil duty-free in January as prices struggle to pull away from five-year lows, and some players expect that to continue through the first quarter of 2015.
"I don't think Malaysia and Indonesia are keen to resume export taxes yet," leading vegetable oil analyst Dorab Mistry told Reuters.
"With the current downward wave in prices as a result of the fall in crude oil, it is very strongly felt by me that Malaysia will announce an exemption from export taxes for first quarter 2015. I would recommend such a decision," he added.
Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange were trading at 2,174 ringgit ($625) per tonne on Wednesday.
The contract has lost more than 18 percent this year, hitting a low of 1,914 ringgit in September.
Mistry, who heads the vegetable oil trading arm at India's Godrej Industries, said the threshold for Indonesian taxes to come into effect was unlikely to be reached for January if crude oil prices stayed weak.
Indonesia decides on its monthly crude palm oil export tax rate by looking at average international and domestic prices. If these fall below $750 a tonne, the levy is dropped.
Malaysia uses a calculation based on average monthly prices provided by the Malaysian Palm Oil Board, the industry regulator. A monthly average above 2,250 ringgit will trigger an export tax that starts from 4.5 percent.
However, the final decision is made by the government.
Malaysia scrapped its export taxes for the crude grade from September until end-December to encourage overseas sales and cushion the fall in prices.
Top grower Indonesia followed suit in October as it strived to remain competitive with its rival and market participants said that could boost palm oil's share of global vegetable oil consumption.
Indonesia will also probably keep its palm oil tariff unchanged in January, said Steaven Halim, an official at the Indonesian Palm Oil Association
Market players are optimistic that the tax exemption could spur demand in palm's biggest consumers, including China, which will be stocking up on the tropical oil ahead of Lunar New Year festivities in February.
"If the tax is zero, it's good for buyers, definitely," said a palm oil trader with a foreign commodities brokerage in Kuala Lumpur.
"Both governments, considering prices have fallen so much, may engineer something where they will keep the taxes at zero," he added, expecting Malaysia to keep the rate at zero until March. ($1 = 3.4780 ringgit).
* Malaysia could exempt duties through Q1 2015
11/12/2014 (Reuters) - Indonesia and Malaysia, the world's top palm growers, will probably keep shipments of crude palm oil duty-free in January as prices struggle to pull away from five-year lows, and some players expect that to continue through the first quarter of 2015.
"I don't think Malaysia and Indonesia are keen to resume export taxes yet," leading vegetable oil analyst Dorab Mistry told Reuters.
"With the current downward wave in prices as a result of the fall in crude oil, it is very strongly felt by me that Malaysia will announce an exemption from export taxes for first quarter 2015. I would recommend such a decision," he added.
Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange were trading at 2,174 ringgit ($625) per tonne on Wednesday.
The contract has lost more than 18 percent this year, hitting a low of 1,914 ringgit in September.
Mistry, who heads the vegetable oil trading arm at India's Godrej Industries, said the threshold for Indonesian taxes to come into effect was unlikely to be reached for January if crude oil prices stayed weak.
Indonesia decides on its monthly crude palm oil export tax rate by looking at average international and domestic prices. If these fall below $750 a tonne, the levy is dropped.
Malaysia uses a calculation based on average monthly prices provided by the Malaysian Palm Oil Board, the industry regulator. A monthly average above 2,250 ringgit will trigger an export tax that starts from 4.5 percent.
However, the final decision is made by the government.
Malaysia scrapped its export taxes for the crude grade from September until end-December to encourage overseas sales and cushion the fall in prices.
Top grower Indonesia followed suit in October as it strived to remain competitive with its rival and market participants said that could boost palm oil's share of global vegetable oil consumption.
Indonesia will also probably keep its palm oil tariff unchanged in January, said Steaven Halim, an official at the Indonesian Palm Oil Association
Market players are optimistic that the tax exemption could spur demand in palm's biggest consumers, including China, which will be stocking up on the tropical oil ahead of Lunar New Year festivities in February.
"If the tax is zero, it's good for buyers, definitely," said a palm oil trader with a foreign commodities brokerage in Kuala Lumpur.
"Both governments, considering prices have fallen so much, may engineer something where they will keep the taxes at zero," he added, expecting Malaysia to keep the rate at zero until March. ($1 = 3.4780 ringgit).