Move expected by market
Confusion still reigns over export levy
The Indonesian government has announced the export duty on Crude Palm Oil in December will be raised to $33/mt from $3/mt Nov. 30, after the December reference price of CPO exports was calculated at $870.77/mt, up from $782.03/mt in November.
The move was expected by market participants due to rising CPO prices. According to S&P Global Platts data, the average CPO FOB Indonesia price was $833.90/mt in November, up 14% from $730.43/mt in October and up 17% from $710/mt in September.
The market is still awaiting news on the export levy, which is currently at $55/mt. “I am honestly tired of waiting for this news since September. Depending on who you ask, it could range from no change to as high as $180/mt,” a producer said. Some market participants were concerned the higher export duty and the potentially “exorbitant” export levy could hurt Indonesia’s competitiveness compared with Malaysia, whose CPO exports are exempt from export duty till the end of the year.
“Indonesia’s exports of crude palm oil have actually been recovering since August. Not only have Malaysian imports of Indonesian palm oil increased significantly, the market was held in suspense awaiting the levy announcement every month. Toward the end of the month when sellers felt that it might be too late for the levy to be imposed, sellers have rushed to export before the next month to clear the stocks. I feel this scenario will be played out until the levy announcement is made. Meanwhile, it is difficult to anticipate which direction the prices may head to amid this confusion,” head of research at Sunvin Group India Anilkumar Bagani said.
Bagani also noted that the Indian government’s recent decision to reduce the basic customs duty on CPO imports would support palm demand, at the expense of competing soft oils, estimating that Indonesian exports in October could dip slightly to 2.75 million mt, with November and December up at 2.85 million and 2.90 million mt, respectively.