23/07/2012 (The Star) -  RHB Research Institute is maintaining its Neutral call on the plantations sector with the crude palm oil (CPO) price assumptions of RM3,100 a tonne for CY2012.

It said on Monday for 2013, its forecast was RM2,900 a tonne and RM3,000 a tonne for CY2014 for now.

RHB Research said India has lifted a six-year old freeze on the base import price of refined palm olein, a move that will make refined palm oil imports from Indonesia more costly and help protect domestic refiners.

It pointed out the change in Indonesia's export tax policy resulted in nearly doubling India's refined palm olein imports to 1.2 million tonnes for the first eight months of the current year from November in comparison with the year-ago period.

The research house added that India's move effectively doubles import taxes on refined palm olein at current market prices.

Since 2006, India has been basing the import duty of 7.5% on palm olein on a fixed base price of US$484 a tonne (RM1,524 a tonne) and had not raised this as the government was battling high food prices.

"With the lifting of the freeze, import duties of imported refined palm oil will be based on the current market price of around US$1,050 a tonne (RM3,308 a tonne), effectively making the imports costlier by about 3.9% based on current prices," it said.

"This news would be negative for sentiment on CPO prices. Whether it would actually affect overall demand significantly is another question, given that India had actually switched from buying more CPO to buying more refined CPO from Indonesia instead, given the impact of the Indonesian export tax," it said.