Malaysia to increase imports from Indonesia this month
KUALA LUMPUR: Malaysian buyers are ramping up imports of Indonesian palm oil as local supply battles to recover from the lingering impact of last year’s crop-damaging El Nino weather.
Traders said world No. 2 producer Malaysia was set to boost imports of palm oil and related products from top grower Indonesia by about 20,000 tonnes this month from typical monthly volumes of around 50,000 tonnes.
The two countries churn out nearly 90 per cent of the world’s palm oil, used to make products ranging .
Some traders said shipments to Malaysia would likely remain at higher levels next month as they expected Indonesia to cut its export taxes on palm to around US$3 (RM13.30) per tonne from US$18 currently.
“Imports from Indonesia could reach 60,000-70,000 tonnes (again) next month, if the new tax kicks in,” said one trader.
Indonesia’s trees are typically younger than Malaysia’s, however, so its crop can be more resilient.
Benchmark palm oil prices were trading at over four-year highs in early January. Though they have since eased by around 10 per cent to RM2,760 ringgit per tonne, that is still way above levels seen at this time last year.
Analysts have forecast a recovery in output by the second half of the year, driving down prices to around RM2,500 per tonne.