Indonesia has temporarily scrapped its export levy for all palm oil products until the end of August in an attempt to boost exports and ease high inventories, finance ministry officials say.
The decision by the world’s biggest palm oil exporter could further depress prices, which have fallen by about 50% since late April to their lowest in over a year.
Indonesian palm oil producers have been struggling with high inventories since the country imposed a three-week export ban through to 23 May to reduce domestic cooking oil prices.
Since lifting the ban, Jakarta has imposed rules on mandatory local sales — the domestic market obligation (DMO) — to keep produce at home to be made into cooking oil. At the same time, it has tried to clear up storage tanks by cutting export taxes and launching a shipment acceleration program.
Finance Minister Sri Mulyani Indrawati said a progressive palm oil export levy would be applied to start in September, with the rate set between $55 and $240 per tonne for crude palm oil, depending on prices.
High palm oil stocks have forced Indonesian mills to limit purchases of palm fruits. At the same time, farmers have complained their unsold fruits have been left to rot.
There were 7.23 million tonnes of crude palm oil in storage tanks at the end of May, according to the Indonesian Palm Oil Association (Gapki).
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