Malaysian palm oil exports are expected to face a shortfall by this year in contrast with its record high exports at RM80.4bil last year in terms of value.
Plantation Industries and Commo-dities Minister Tan Sri Bernard Dompok believes exports will fall although the final figure will also depend on how the market reacts in the next two months.
“Even if there is a shortfall, it would not be too much. A forecast is of no significance to me at the moment. I would rather see how the market reacts after this,” he said after launching the Palm Oil Trade Fair and Seminar 2012 organised by the Malaysian Palm Oil Council.
Dompok hoped that the last two months could help even out the year’s poorer export figures. The export figure for the first nine months this year stood at RM54bil.
Considering the crude palm oil (CPO) duty-free shipment quota will be abolished come January 2013, there is a possibility that some importers may choose to increase imports before the year ends.
Last week, Dompok also announced the Government’s move to reduce palm oil export tax to increase the competitiveness of local exporters. The tax reduction from the current 23% will be on a step-up basis with tax ranging from 4.5% to 8.5%, starting from RM2,250. After which, every RM150 would entail a 0.5% increase in duties.
Dompok said these new tax structures would be implemented next year to give ample time to the industry to adjust.
In response to the new tax structure, Solvent Extractors’ Association of India executive director B. V. Metha said it would likely benefit both India and Malaysia as the former would now consider increasing its CPO imports from Malaysia.
“When we can get low prices, we will buy regardless from where. Without the transport quota for duty free exports, the game will change come January, provided Indonesia does not change its current duty structure,” he said.
India now imports 7.5 million tonnes of palm oil a year, of which 6.5 million tonnes are CPO. CPO shipment from Malaysia to India has increased 60% over the first three quarters of this year, and makes up 20% of India’s total CPO imports. The rest comes from Indonesia.
“Perhaps we can now balance the ratio between Malaysian and Indonesian CPO imports to 60:40 or even 50:50,” Metha said, adding that he expected India to import 8 million tonnes of CPO next year.
CPO price for the three months December benchmark closed at RM2,433 per tonne yesterday, a 7.9% recovery from the four-year low at RM2,255 per tonne on Oct 2.
As for the storage capacity for palm oil inventory which has hit a record high at 2.48 million tonnes last month, Dompok did not directly address the issue but said: “Although prices have not been upbeat over the last few weeks, demand remains strong.
“It is important to maintain adequate supply of edible oils for the world market at affordable prices. I am confident that palm oil is poised to face this challenge.”
On another note, Bernama reported that the supply of Malaysian palm oil was expected to increase to 19.1 million tonnes next year from the 18.91 million tonnes recorded in 2011.
According to Ganling Sdn Bhd director Ling Ah Hong, the rise would be mainly due to sound weather conditions in the country. He added that the supply of Malaysian palm oil was expected to fall to 18.4 million tonnes due to the residual effects of the last El Nino in 2009.