MALAYSIAN refiners have been forced to import extra Indonesian crude
palm oil (CPO) 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 yesterday.
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 yesterday.
Indonesia raised its export tax on CPO to 25 per cent in February from 20 per cent under a price formula.
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 holidays 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
per cent at one-week high as traders covered positions ahead of the
long holidays over the floods.
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. – Reuters
