Malaysia, the world’s second-largest palm oil exporter, has announced that it will keep its export tax for crude palm oil (CPO) at 8% for November. This is the same rate as October, despite a lower reference price for the commodity.
The Malaysian Palm Oil Board (MPOB) published a circular on its website on Tuesday, showing that the reference price for November was set at RM3,556.08 per tonne. The October reference price was RM3,710.50 per tonne.
The export tax structure for CPO starts at 3% for prices between RM2,250 and RM2,400 per tonne. The maximum tax rate of 8% applies when prices exceed RM3,450 per tonne.
Malaysia’s palm oil industry faces challenges amid high prices
Malaysia’s decision to maintain its export tax for CPO comes amid high global prices for the edible oil, driven by strong demand from China and India, as well as tight supplies from Indonesia, the top producer.
According to the MPOB, the average CPO price in September was RM4,094.50 per tonne, up 32.6% from a year ago. The price reached a record high of RM4,525 per tonne on Aug 12.
However, the high prices have also posed challenges for the Malaysian palm oil industry, such as lower profit margins for refiners and downstream players, as well as reduced competitiveness in the international market.
In addition, the industry has been struggling with labour shortages due to the Covid-19 pandemic and travel restrictions, which have affected the harvesting and processing of fresh fruit bunches.
Malaysia’s palm oil exports expected to increase in October
Despite the challenges, Malaysia’s palm oil exports are expected to increase in October, as buyers stock up ahead of the festive season in major consuming countries.
According to cargo surveyor Intertek Testing Services (ITS), Malaysia’s palm oil exports in the first half of October rose 9.5% from the same period in September, to 849,647 tonnes.
The main destinations for Malaysian palm oil were China, India, Pakistan and the European Union.
According to analysts, Malaysia’s palm oil exports may reach 1.7 million tonnes in October, up from 1.6 million tonnes in September.
