19.06.2018 (New Straits Times Online) - PETALING JAYA: The Malaysian Palm Oil Council (MPOC) does not foresee any downturn in China's purchase of palm oil from Malaysia.

The government agency maintains that global demand and supply forces determines the pricing of palm oil and not Malaysia’s political sentiments.

"We don't see any issue in the politics of this country affecting China's palm oil purchase from Malaysia. We do not foresee a downturn," said MPOC chief executive officer Datuk Kalyana Sundram.

Kalyana was responding to a media query on former prime minister and current Pekan member of parliament (MP) Datuk Seri Najib Razak's allegation that China is likely to reduce its palm oil purchase following Malaysia's change of government to Pakatan Harapan coalition, following the 14th General Elections.

"The Pekan MP is entitled to his personal view," said Kalyana, as he tactfully side-steps any possible political insinuation.

In is Facebook posting, Najib on Monday said China, which was once the fourth largest importer of palm oil and was in the second place last year due to improved diplomatic and trade relations with Malaysia, is likely to reduce purchase of palm oil following the outcome of the 14th General Election.

The government’s action to impose a five per cent tax on crude palm oil (CPO) exports is the main reason why prices and demand has fallen, Najib said.

Since the start of the year, the third month benchmark palm oil futures on Bursa Malaysia Derivative Exchange have been on a decline from RM2,500 per tonne to the current RM2,300 per tonne.

Najib highlighted the Barisan Nasional government had suspended the CPO tax in the first four months of 2018 "to ensure the income of smallholders were not affected and for our crude palm oil (CPO) to remain competitive in the international market.”

In response, Kalyana explained the waiver of the CPO tax then was meant to be a short term measure to facilitate duty-free CPO to be shipped out of Malaysia to overseas refineries, owned by Malaysians.

The government had since resumed imposition of the tax, according to the staggered tier of CPO pricing, to ensure adequate CPO for refiners in Malaysia for downstream value-adding businesses.

Kalyana went on to forecast that, in the weeks ahead, CPO prices are likely to trade a little bit higher at between RM2,400 and RM2,500 per tonne.