Asian markets await new RI taxes on CPO

Asian markets await new RI taxes on CPO

KUALA LUMPUR (Reuters): Asian palm oil markets are expected to be firm this week if the Indonesian government decided to raise the export tax for crude palm oil (CPO) or introduced a plan to overcome a domestic shortage of cooking oil, traders said.

The government said last week it would increase the export tax on crude palm oil to between 50 and 60 percent from the current 40 percent to help slow an export boom which has caused cooking oil shortages.

The tax on refined, bleached, and deodorized (RBD) palm oil and RBD olein was expected to be raised to between 45 and 55 percent from 35 percent.

The crude palm kernel oil export tax was expected to be hiked to 40-50 percent from 35 percent and RBD palm kernel oil will be 35-45 percent from 30 percent, the sources said.

Indonesian traders said palm olein prices hovered at Rp 6,100- Rp 6,400 per kilogram in Jakarta.

"If Indonesia decides to impose additional tax, it will be good for us. Prices will start to shoot up again," said a trader in Kuala Lumpur.

"Or Indonesia can limit quotas for exporters to sell with a tax and the rest go to the domestic market," he said.

The trader said if Indonesian exports cost more, buyers might be forced to buy from Malaysia.

Indonesia exported about 200,000 tons of crude palm oil in June compared with 100,000 tons in May.

"Indonesia has oversold in the past few weeks, and a lot of them sold forward," said a trader in Singapore.

"At this moment they just want U.S. dollars, so even if domestic prices are higher than export prices, they still prefer to export."

The Indonesian rupiah was quoted at 14,400/14,700 to the dollar early on Monday.

Regional traders also said that if the Malaysian ringgit weakened further against the dollar, market sentiment would be even more bullish for Malaysian exports.

"The ringgit is still in a downtrend. The market looks bullish both fundamentally and technically," one trader said.

"I think the upward trend will last for a while."

The ringgit was quoted at 4.18/4.19 to the dollar early on Monday and traders expect the Malaysian unit to remain soft.

Traders could not predict palm oil's support or resistance levels as the market is seen as volatile.

Malaysia's benchmark, third month futures contract closed on Friday at 2,387 ringgit a ton.