Malaysia keeps CPO export tax at zero

KUALA LUMPUR: Malaysia will keep its crude palm oil (CPO) export tax at zero per cent in March, contrary to market expectations and despite a recent rise in prices, Reuters reported last Friday.
CPO prices have been rising due to concerns about lower production as an El Nino weather pattern brings scorching heat to Southeast Asia, reducing plant yields and cutting output.
Benchmark palm oil prices have gained 5.9% so far in 2016, while palm free-on-board prices have risen 12.8% so far.
Malaysia, the world’s second-largest palm producer, calculated a reference price of RM2,172.69 a tonne for March. It imposes a CPO export tax of 4.5% to 8.5% when the reference price rises above RM2,250 a tonne. It has maintained a zero tax rate since May 2015.
Market participants had expected Malaysia to impose a tax since it is typically based on a formula taking the average of spot palm prices for a period of about 30 days prior to when the tax is set. However, the government has not fully explained the methodology behind the tax.