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KUALA LUMPUR (Dec 23): Malaysia’s decision to resume the crude palm oil export tax at the highest rate of 8% in January 2021 is slightly negative for crude palm oil (CPO) prices , as it will curb the demand for palm oil in the country. stated PublicInvest Research in a note today.
PublicInvest Research analyst Chong Hoe Leong said the move will reduce the gap between Malaysian and Indonesian CPO prices to about RM570 per tonne, from RM862 per tonne, making it a more competitive playing field.
“The impact will be more demanding for pure upstream players, while it will be softer for embedded players,” he said.
According to Chong, the resumption of palm oil export duties will cut margins on upstream plantations.
Based on the latest Malaysian Palm Oil Board (MPOB) crude palm oil price of RM3,651 per tonne, the 8% export duty will translate to RM292 per tonne.
“However, it will continue to be a good level for plantation companies, as the realized CPO price is still above RM3,000 per tonne,” he said.
“On the other hand, it will be a relief for refiners and intermediate players as it reduces the gap with their Indonesian counterparts,” he said.
He also believes that palm oil importers will rush to get more imports from Malaysia before export duties are resumed for significant savings.
Chong maintained its “neutral” stance in the plantation sector, with Sarawak Plantation Bhd and Ta Ann Holdings Bhd being its main options.
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