Palm oil stockpile prompts calls for temporary export duty waiver
The Ministry of Finance is weighing the proposal as some independent millers report difficulty selling CPO, although accounts of delivery disruptions differ.
Industry players want Malaysia to suspend its 10% crude palm oil (CPO) export duty temporarily, citing difficulties clearing mill stocks and competition from Indonesian supplies. A Ministry of Plantation and Commodities spokesperson told The Edge that the Ministry of Finance was assessing the proposal and had authority over the decision.
Industry sources cited by The Edge said reduced refinery buying had left some independent mills holding unsold CPO, with storage capacity becoming constrained. One source warned that mills could cease purchasing fresh fruit bunches (FFB) within weeks, putting smallholders' income at risk.
Accounts within the industry differed. A milling industry source said deliveries to Peninsular Malaysia's refineries had continued without problems. Sandeep Singh, founder and director of Global Farm Trade Sdn Bhd, said refineries were favouring their own mills' supplies, potentially affecting smallholders and sales of FFB if stocks were not cleared.
September inventories hit a record 3.51 million tonnes, Malaysian Palm Oil Board data showed, a monthly increase of 24.54%. CPO production reached a record 2.12 million tonnes after rising 16.48%, while exports of palm oil dropped 12.13% to 1.12 million tonnes.
Industry estimates place Indonesian CPO prices RM700 to RM900 per tonne below Malaysian supplies. Those advocating a waiver say it could improve export competitiveness and reduce local inventories. November's duty remains 10%, using RM4,323.78 per tonne as the reference price.
A Fadzli Abdul Aziz, chief executive officer of the Palm Oil Refiners Association of Malaysia (Poram), declined to comment on the proposed suspension.
