M'sia urged to remove crude palm oil export duties

He said Malaysia’s latest measure to slash its CPO export duty from 23 per cent would not be able to reduce the current problem of high palm-oil stocks. This is because of the bearish fundamentals triggered by high production in major producing nations and the slowdown in the global economy, which led to reduced demand for CPO.
“Currently, palm-oil buyers are not snapping up more cargoes, although CPO is trading at a wide discount of US$315 [Bt9,645] per tonne to soy oil.
“Ships these days also have to wait until there is room to discharge into shore tanks, as the turnaround time for vessels has gone up,” he pointed out.
For this year, Malaysia’s CPO production was pegged at 18 million to 18.2 million tonnes, while Indonesia was likely to exceed 27.5 million tonnes, Dorab said on the last day of the International Palm Oil Trade Fair and Seminar organised by the Malaysian Palm Oil Council.
He also suggested that the CPO futures third-month benchmark price should be allowed to trade at 2,200 ringgit (Bt22,200) per tonne or CIF Rotterdam price at $749 per tonne within the next four to six weeks.
Dorab warned that if CPO prices continued to be held at artificially high levels, it would be counterproductive, thus leading the existing 2.48 million tonnes of local palm oil stocks to be much higher, possibly surpassing 3 million tonnes by January and remaining at that mark until March.
“I believe the immediate removal of export taxes and quotas and allowing the CPO price to trade lower at 2,200 ringgit per tonne will be the cures to help restore the high-palm-oil stocks situation back to normal in three months’ time,” he added.
Meanwhile, Thomas Mielke of forecasting service Oil World, who did not gave a CPO price forecast, projected Malaysia’s palm-oil production this year to be 0.4 per cent lower year on year to 18.5 million tonnes.
He believes that the current CPO price is already undervalued and expects demand to climb back, given reduced supply from other oilseeds such as rapeseed and soybean.
According to Mielke, the production of 10 main seed oils for 2012-13 will not increase for the first time in 20 years. Palm oil, therefore, has to fill part of the demand that cannot be satisfied by other seed oils.
Another palm-oil expert, chairman Dr James Fry of consultancy LMC International, also did not gave his CPO price forecast at POTS 2012. He said the high palm-oil stocks could be channelled to support a biodiesel programme in Malaysia.