JAKARTA (TheInsiderStories) – Indonesia raised the reference price of crude palm oil (CPO) for the stipulation of export duty for February 2020, after the global market demand for CPO strengthened, trade ministry announced on Wednesday (01/29). The ministry set the price at US$839.69 per metric ton (MT), increased by $109.97 or 15.07 percent from $729.72 per MT set this month.
Wisnu Wardhana, ministry’s director-general of foreign trade, said that the selling price of CPO on the global market is currently $750 per ton. Therefore, the government imposes an export duty of $18 per ton for next month. The stipulation was listed in Minister of Trade Regulation No. 01 of 2020 concerning export benchmark price for agricultural and forestry products subject to export duties.
“Based on the rules, CPO products will be subject to export duties if its reference price exceeds the standard of $750 per ton. Currently, the CPO reference price is at that level,” he said through an official statement.
Meanwhile, the reference price of cocoa products was set at $2,544.43 per MT, down 1.06 percent from the previous month at $2,571.64 per MT. This makes cocoa products price decrease to $2,256 per MT, down 1.1 percent or $26 from $2,282 per MT in the previous month. Nevertheless, the export duty for cocoa products remained unchanged at 5 percent. As for prices and export duties of wood and leather products, there was no change from the previous month.
Meanwhile, Malaysian palm oil futures plunged 7 percent on Tuesday, their biggest intraday drop in more than seven years, on concerns that the spread of a coronavirus in China would cut demand of the vegetable oil in its second-largest importer.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange hit its lowest level since Nov 28, 2019, at 2,660 ringgit ($654.37) per tonne, Reuters reported. The coronavirus outbreak that began in the central Chinese city of Wuhan, in the province of Hubei, has killed 106 people in China so far and infected more than 4,520 globally, most of them in China.
Further weighing on prices was soyoil’s overnight movement on the Chicago Board of Trade, which hit a 6-week low. It last traded at 1.2 percent lower. Palm oil is generally affected by price movements in related oils, as it competes for a share in the global vegetable oil market.
The spread of coronavirus in China and falling demand from India saw a sharp correction in CPO price, signaling a possible end to the rally in the edible oil which began in August last year. The China factor fuelled concerns that demand for CPO will fall as the clampdown in China hits the commodities world hard due to lower consumption from the largest buyer.
Written by Lexy Nantu, Email: firstname.lastname@example.org