26/10/2010 (Platts), Singapore - Indonesia, a burgeoning exporter of biodiesel in Southeast Asia, announced Tuesday that it will raise export tax on crude palm oil to 10% in November, up 2.5 percentage points from October, but will maintain the export tax on biodiesel at 2%.

Sources said the revision upwards on CPO export duty was due to surging global palm oil prices, which have risen 12% since October 1. The benchmark third-month CPO futures on Bursa Malaysia was trading at MR3,055/mt ($989/mt) Tuesday, compared with MR2,735/mt ($885/mt) at the start of the month.

"So essentially 8% tax incentive to move biodiesel, this is worth $70/mt incentive," said a trader.

Indonesia uses the average CPO spot prices in Rotterdam to set its export tax on CPO and its derivatives every month. But the export duty on biodiesel came into effect for the first time this month.

The export tax is aimed at restricting the flow of CPO exports so that cooking oil supply in the country would be guaranteed, mitigating fears of a shortfall in this staple commodity.

Meanwhile, Indonesia exported 29,706 mt of palm oil-based biodiesel, or palm methyl ester, during the first 25 days of October to the European Union, data released Monday by independent market surveyor Intertek showed.

No biodiesel exports were recorded from fellow producer Malaysia during that period. In September, Indonesia exported 31,500 mt of biodiesel, while Malaysia exported 10,000 mt, according to Intertek.

Indonesia surpassed Malaysia in palm oil production in 2007 and is now the world's largest producer. The two countries account for more than 85% of global production.