07/09/2011 (Bernama) - The new crude palm oil (CPO) export tax structure introduced by the Indonesian Finance Ministry is expected to have a negative impact on the country's upstream planters for the financial years 2012 and 2013, says Hwang DBS Vickers Research.

"The Indonesian upstream planters have two options of either accepting the lower CPO prices or build a refinery to take advantage of the tax spread," it said in a research note here today.

Hwang DBS Vickers Research also said that it would take time for the planters to decide and build refining capacities.

"Assuming a refining capacity cost of US$100 (including land) per metric tonne, we estimate that the investment should pay for itself within three years.

"Hence, on a consolidated basis, if a planter only refines 40 per cent of total CPO output, the impact would still be positive," it added.

The research house also said the new export tax, effective Sept 15, 2012, will not affect global CPO supply, as it believes the upstream planters would have to accept lower prices until any additional refining capacity comes on stream.

Meanwhile, Hwang DBS Vickers Research noted that CPO prices would most likely move higher than its current projections, due to lower-than-expected US soybean production.

It also said a potential shift in planting in South America from soybeans to corn to take advantage of higher corn prices, will contribute to the higher CPO price.