KUALA LUMPUR (Dec 23): Malaysia’s move to resume the crude palm oil export tax at the highest rate of 8% in January 2021 is slightly negative for crude palm oil (CPO) prices as it will curb demand for palm oil from the country, stated PublicInvest Research in a note today.
PublicInvest Research analyst Chong Hoe Leong said the move will narrow the gap between Malaysian and Indonesian CPO prices to about RM570 per ton, from RM862 per ton, making it a more competitive playing field.
“The impact will be more taxing on pure upstream players, while it will be milder for integrated players,” he said.
According to Chong, the resumption of the palm oil export duty will see a cut in upstream plantation margins.
Based on the Malaysian Palm Oil Board's (MPOB) latest CPO price of RM3,651 per ton, the 8% export duty will translate into RM292 per ton.
“Nevertheless, it will still be a good level for plantation companies as the realised CPO price is still above RM3,000 per ton,” he said.
“On the other hand, it will be a relief for refiners and downstream players as it narrows the gap with their Indonesian counterparts,” he said.
He also believes palm oil importers will rush for more imports from Malaysia ahead of the resumption of the export duty for significant savings.
Chong maintained his "neutral" stance on the plantation sector, with his top picks being Sarawak Plantation Bhd and Ta Ann Holdings Bhd.