THE Ministry of Plantation Industries and Commodities is discussing with the Ministry of Finance about reducing Malaysia’s palm oil export tax from 8% to 4-6%.

Plantation Industries and Commodities Minister Zuraida Kamaruddin said Malaysia should slow down its biodiesel mandate to help meet global demand amid an edible oil shortage.

“This proposed temporary cut is pending a decision but we believe Malaysian exporters are likely to be clear winners in the short term, as global buyers will source Malaysian palm oil.

“Nevertheless, the Ministry of Plantation Industries and Commodities urges industry players to focus closely on market variables that are capable of sparking price volatility,” she said in the statement today.

Zuraida said the variables include Indonesia’s shift in export policy, recovery of palm oil production in Malaysia, adjustment of biodiesel policies globally, progress of the Russia-Ukraine war, and the weather in both the United States and South America.

Meanwhile, she said MPIC will continue to monitor the current situation involving Indonesia’s policy changes to ensure that the palm oil industry, which is the country’s main commodity, continues to contribute to economic growth, thus benefiting all, especially smallholders and industry players.

Zuraida said it should not be a cause for concern that the palm oil stockpile increased for the first time since October 2021 by 11.5% month-on-month to 1.64 million tonnes in April, driven by higher output and weaker exports.

“This is because palm oil stockpile will likely dip in May on the back of seasonally lower crude palm oil (CPO) production (arising from Ramadan) and stronger exports (following the Indonesian government’s recent move to widen its export ban on raw materials for cooking oil).

Yesterday, Indonesia announced that it would lift its palm oil export ban from May 23, following improvements to domestic cooking oil supplies and as Jakarta considers the welfare of 17 million workers in its palm oil industry.

Looking ahead, Zuraida said CPO prices are likely to consolidate downward due to a pending uptrend in monthly fresh fruit bunches production rather than poor demand.

However, she said CPO prices should stay elevated due to factors such as tight supply, robust market, spiralling oil prices and uptake from China as it opens its borders again. – Bernama, May 20, 2022.