Malaysia to in­crease im­ports from In­done­sia this month

New Straits Times - - Business -

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.

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