Traders puzzled by lack of coconut oil tax

Traders puzzled by lack of coconut oil tax

LONDON (Reuters): European vegetable oil traders were puzzled Monday by the lack of any export tax on coconut oil from Indonesia.

"It makes no sense at all, the Indonesians have not limited or banned the export of coconut oil, nor are they going to tax exports when it is a cooking oil, while they are taxing and limiting exports of palm kernel oil which is not a cooking oil," said one.

The Indonesian government announced on Monday that palm kernel oil will attract an export tax of 18 percent from April 1.

Indonesian has never before taxed exports of palm kernel oil or palm stearin which will also be taxed at 18 percent form the same date.

At present export of palm kernel oil and palm stearin is only allowed until March 14, but traders in Indonesia said exports will be permitted again from April 1.

The Indonesian government also plans to raise the export tax on crude palm oil from five to 20 percent, the maximum permitted by the IMF and from four percent to 18 percent on refined bleached deodorized (RBD) palm oil.

RBD palm olein which be taxed at 12 percent up from two percent.

Indonesian imposed a ban on the export of crude palm oil and products at the beginning of the year to insure supplies to the local market and bring prices down. Traders in Europe said the export tax had been expected and when the 70 percent fall in the value of the rupiah was taken into consideration most said they could live with it.

"It just the lack of action on coconut oil that seems wrong and is leaving people wondering what is going on," said one.

Meanwhile, dwindling supplies of Malaysian and Indonesian palm oil were expected to boost other vegetable oil values, an oilseed analyst in Winnipeg said Monday.

"The rapidity of stock declines and escalating cash palm oil prices, forecast by AgResource Company to arrive at US$0.35 a pound, will buoy the other world vegetable oil prices," Richard Loewy, president of Chicago-based AgResource Company Inc told delegates at the Canadian Wheat Board's Grain World conference.

Malaysia and Indonesia account for more than 81 percent of world palm oil output.

The U.S. Agriculture Department last month forecast Malaysian production in 1997/98 at 8.8 million tonnes, down 200,000 tonnes from the prior year.

Fog, drought and forest fires last summer and fall were expected to cut output further in both countries over six to 18 months, lending more support to other vegetable oils, Loewy said.