KUALA LUMPUR, Feb 05, 2008 (Thomson Financial via COMTEX) -- Crude palm oil (CPO) futures traded on the Malaysian derivatives exchange hit a fresh record on Tuesday after Indonesia, the world's top palm oil producer, said it may hike its export tax on CPO in a bid to curb the rise in food prices.
At 3.30 pm, the benchmark CPO futures contract for April delivery was up 66 ringgit at 3,411 ringgit per metric ton, off a high of 3,458 ringgit.
Soybean oil futures on the Chicago Board of Trade on Monday rose to an all-time high of over 57 US cents per pound, with the May contract finishing at 56.54 cents, up 1.77 cents.
The Indonesian government said recently that tax on exports of CPO and other palm-based products may be raised to 20-25 percent from the current 9-10 percent if international CPO prices exceed 1,200-1,300 US dollars per ton.
The move is part of a government initiative announced last Friday, aimed at curbing the rise in prices of essential food items such as rice, wheat flour and palm-based cooking oil.
Edible oil supply to the international markets may drop if Indonesia raises its export tax on CPO further, analysts said.
Indonesia and Malaysia together account for more than 80 percent of the world's total palm oil output.
"We expect a higher export tax to boost global CPO prices as tight supply conditions allow producers to pass on the higher rate to consumers," said Ivy Ng, plantation analyst at CIMB Investment Bank.
The new measure will hit palm oil companies that own oil palm estates in Indonesia, Ng said in a note to clients.
"Malaysian planters stand to benefit the most from higher export taxes as they will achieve higher sales without a corresponding increase in costs," she said.
(1 US dollar = 3.23 ringgit)
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