Indonesian suppliers have deferred at least 310,000 metric tons of palm oil shipments from November to December, betting that a recent price slide could prompt Jakarta to cut its export tax by more than $50 a ton next month, sources from trading houses and plantation companies said.
The shipments, representing about 12% of typical monthly exports, have been postponed to the first week of December, four sources who are directly involved in the deals said, with the decision expected to boost domestic stockpiles.
The move will lift shipments in December, a month when exports typically decline. Indonesia exports about 2.5 million tons of palm oil each month.
Higher Indonesian exports in December could support benchmark palm oil prices on the Bursa Malaysia after they fell to a four-month low earlier this week due to rising production in Malaysia.
Indonesia and Malaysia are the world’s top producers of palm oil – used in products like ice cream and soap – and it is favoured by some in Asia over alternative edible oils like soyoil and sunflower oil.
The market expects export duties for December cargoes to be cut by more than $50 per ton, prompting sellers to shift shipments from late November to early December to benefit from the anticipated reduction, the four sources and a Mumbai-based dealer at a trading house said. The sources and the dealer did not wish to be named as their companies do not allow them to speak publicly.
Indonesia set its November crude palm oil reference price at $963.75 a ton, resulting in an export tax of $124. Jakarta is expected to unveil its December export tax before the start of the month.
Indonesia’s trade ministry sets a monthly reference price for crude palm oil (CPO) and its derivatives, based on average CPO prices in major international markets over a specified period.
Indonesia collects levies on palm oil exports to help fund its national biodiesel programme. The revenue is used to bridge the price gap between palm-oil-based biodiesel and conventional diesel, ensuring the country’s mandatory biodiesel blending policy remains economically viable.
Advancing or deferring large shipments is rare in the palm oil trade and traders say a 310,000-ton contract deferral is unusually large.
Echoing the trade sources, Sandeep Bajoria, chief executive of Sunvin Group, a Mumbai-based vegetable oil brokerage, said more than 100,000 tons of palm oil supplies bound for India from Indonesia were deferred from this month to December.
As a result, India’s palm oil imports could rise to around 750,000 tons in December from 650,000 tons in November, Bajoria said.
India is the world’s biggest palm oil importer.
Source: Reuters
