Price of crude palm oil stays under pressure
27.03.2018 (The Star Online) - PETALING JAYA: Crude palm oil (CPO) prices are expected to stay under pressure by the re-imposition of the export tax next month and concerns over the brewing US-China trade war, said analysts.
This is reflected in the third-month benchmark CPO futures contract for June, which was traded RM8 lower at RM2,420 per tonne as at 5 pm yesterday.
CIMB Research said in its latest report that Malaysia’s decision to resume its CPO export tax at 5% in April after a three-month suspension was negative to local CPO prices in the short term.
“This could lead to lower CPO prices with traders likely to pass on some of the additional taxes to the oil palm farmers.
“It could also raise the share of local processed palm oil exports at the expense of CPO exports in April, while Indonesia is likely to see stronger CPO demand next month,” said the research unit.
Malaysia has fixed the CPO reference price at RM2,474.6 per tonne, which is within expectations as the government had indicated that it would not extend the suspension of the export tax granted on Jan 8 this year.
On the other hand, CIMB Research said the CPO tax in April would likely boost local CPO exports till the last week of March, as “CPO exporters would have to pay an additional RM123.7 per tonne (US$31.6) in taxes to export local CPO starting April”.
“Hence, this move will help to improve the competitiveness of local palm oil refiners against their Indonesian peers.
“It will widen the export tax gap between refined palm oil and CPO in Malaysia to US$31.6 per tonne in April from nil this month,” it added.
Meanwhile, China on Friday unveiled plans to impose tariffs on up to US$3bil of US imports in retaliation against the US tariffs on Chinese steel and aluminum products.
China is reported to be considering a 15% tariff on US products, including dried fruit, wine and steel pipes and a 25% tariff on pork products and recycled aluminum.