Jakarta, CNBC Indonesia – The price of Crude Palm Oil (CPO) has starred up to its highest level in the last 8.5 years last week. Meanwhile, the government changed the CPO export levy tariff in December.
According to reflective data, the price of CPO on the Malaysian Derivatives Exchange this week was nearly 3 percent to 3,472 ringgit per tonne or around US. It. $ 855 / ton. The elevation is the highest since May 2012.
The government is now adjusting the CPO levy rate based on price value layer boundaries that refer to the reference price set by the Minister of Trade.
This is stated in the Minister of Finance Regulation No.191 / PMK.05 / 2020 on amendments to the Minister of Finance Regulation No.57 / PMK.05 / 2020 on Service Rates for Public Service Bodies of the Oil Palm Plantation Fund Management Agency in The Ministry of Finance.
The regulation will take effect from 10 December.
In this new regulation, the minimum payment of CPO export fee is US $. It. $ 55 per ton and the maximum is 255 US. It.
The fee rate is US. It. 55 US. It. Per tonne, if the CPO price is lower or equal to US. It. $ 670 per ton.
Each time the CPO price increases by 25 US dollars. It. US. US, the levies will increase by 5 US dollars. It. Per ton. If the CPO price is higher than $ 995 per tonne, the export levy rate will reach US $ 1. It. $ 255 per ton.
The increase in CPO this week is due to the tightly supply that is predicted. The results of a Reuters survey have shown that Malaysia’s CPO stock in November is likely to fall 2% from the previous month to 1.54 million tonnes.
Meanwhile, Dorab Mistry, a top CPO analyst, estimates that Malaysian palm oil production in 2020 is likely to reach 19.2 million tonnes, and December stocks fall to a level of 1.4 million tonnes.
In addition, last week India, as the largest global palm oil consumer, decided to cut import duties by 10 percentage points from 37.5 percent to 27.5 percent. The Indian government is reportedly worried about the high price of local vegetable oil.
Market sources estimate that palm oil imports to India in December could increase to around 700,000-730,000 metric tons, up from the previous estimate of 550,000-600,000 metric tons.
Meanwhile, Sudhakar Desai, President of the India Vegetable Oil Producers Association (WPA) estimates that the demand for CPO in his country can soar to 100,000 tonnes per month with this policy. This is because CPO imports will be cheaper than competing products.
“This cut makes the CPO more competitive. We only pay an import duty 7.5% cheaper than imports of soy bail or sunflower seeds,” Desai said, according to Reuters. For information, the import duty rate for soybean oil and sunflower seeds in India is 35%.
CNBC Indonesia research team