KUALA LUMPUR: Malaysian refiners have been forced to import extra Indonesian crude palm oil after local supplies dropped on floods in a key growing area, delaying at least 70,000 tones of refined exports to major buyers like China and India that face soaring food costs, industry officials said on Tuesday, Feb 1.
Heavy rains at the weekend covered many estates in Malaysia's No. 2 oil palm growing region of southern Johor, disrupting the supply chain from the estates to the refineries.
To meet the shortfall in supply, refiners in Malaysia's key export port of Pasir Gudang in Johor were eyeing Indonesian palm oil stored in floating barges in the Malacca Strait.
Indonesia is the world's largest producer of the vegetable oil, followed by Malaysia.
"Before the end of the month, Indonesian firms have been shipping out their palm oil to avoid the higher export tax in February," said a Malaysian refiner on Tuesday.
Indonesia raised its export tax on crude palm oil to 25 percent in February from 20 percent under a price formula.
"This trend has been going on for a while but at a time when floods are in Johor, it makes things a little easier for us."
Signalling a rush to make up the shortfall, another refiner said that at least 20,000 tonnes of Indonesian palm oil was waiting to be unloaded at Malaysia's largest palm oil export port, Pasir Gudang in Johor.
Palm oil processors in Malaysia generally slow down ahead of the Lunar New Year this week. But the refiners will need to secure more supplies after the holiday as Malaysian stocks hit a five month low in December and demand is expected to pick up.
The previous day, Malaysian palm oil futures ended up 3 percent at one-week high as traders covered positions ahead of the long holidays over the floods.
Malaysian markets are closed on Tuesday for a public holiday and will re-open on Wednesday for the morning trading session before being shut for the rest of the week.
Higher prices of palm oil, used as a cooking oil, may contribute to escalating food costs for top buyers India and China, which are scrambling to use monetary policy tools and food cost measures to rein in inflation.
India's trade minister said Asia's third largest economy will consider cutting import duties for more food products if needed. - Reuters
Heavy rains at the weekend covered many estates in Malaysia's No. 2 oil palm growing region of southern Johor, disrupting the supply chain from the estates to the refineries.
To meet the shortfall in supply, refiners in Malaysia's key export port of Pasir Gudang in Johor were eyeing Indonesian palm oil stored in floating barges in the Malacca Strait.
Indonesia is the world's largest producer of the vegetable oil, followed by Malaysia.
"Before the end of the month, Indonesian firms have been shipping out their palm oil to avoid the higher export tax in February," said a Malaysian refiner on Tuesday.
Indonesia raised its export tax on crude palm oil to 25 percent in February from 20 percent under a price formula.
"This trend has been going on for a while but at a time when floods are in Johor, it makes things a little easier for us."
Signalling a rush to make up the shortfall, another refiner said that at least 20,000 tonnes of Indonesian palm oil was waiting to be unloaded at Malaysia's largest palm oil export port, Pasir Gudang in Johor.
Palm oil processors in Malaysia generally slow down ahead of the Lunar New Year this week. But the refiners will need to secure more supplies after the holiday as Malaysian stocks hit a five month low in December and demand is expected to pick up.
The previous day, Malaysian palm oil futures ended up 3 percent at one-week high as traders covered positions ahead of the long holidays over the floods.
Malaysian markets are closed on Tuesday for a public holiday and will re-open on Wednesday for the morning trading session before being shut for the rest of the week.
Higher prices of palm oil, used as a cooking oil, may contribute to escalating food costs for top buyers India and China, which are scrambling to use monetary policy tools and food cost measures to rein in inflation.
India's trade minister said Asia's third largest economy will consider cutting import duties for more food products if needed. - Reuters
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