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Indonesia will review its palm oil export quotas amid rising domestic cooking oil prices, the Coordinating Ministry of Maritime and Investment Affairs said.
Indonesia imposes a so-called Domestic Market Obligation (DMO) on palm oil, under which companies can export only after they have sold a portion of their production on the domestic market.
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The government regulates the price of palm oil sold under the DMO scheme, which is channeled into a cheap cooking oil program.
Authorities will also review the price set for DMO, according to the statement released late on Monday. Under the DMO, the price of crude palm oil is currently capped at 9,300 rupees ($0.61) per kilogram, and the price of olein is capped at 10,300 rupees.
Currently, Indonesia allows companies to export six times the volume they sold to the domestic market.
Indonesia, the world's biggest palm oil producer, will suspend some existing palm oil export licenses until the end of April, officials said on Monday, as exporters have built up large quotas for shipments since late last year.
However, officials said companies can obtain additional export quotas if they supply the domestic market.
Industry group Indonesia Palm Oil Board reiterated on Tuesday that palm oil companies had little urgency to increase their DMO sales to secure export quota due to weak demand for their exports and high export taxes.
“The export tax of 52 dollars per ton must be suspended until after Eid al-Fitr,” President Sahat Sinaga told reporters, so palm oil companies were encouraged to export and in turn increase its DMO compliance to secure more export quotas.
Malaysia's benchmark palm oil contract rose more than 2% on Tuesday following the move in Indonesia.
Source: Bernadette Christina Munthe | Notícias Agrícolas
