Indonesian palm oil prices slipped on Tuesday with a weaker Malaysian market, concerns over a higher export tax in July and sluggish demand amid a high production cycle, dealers said. The state marketing centre in Jakarta did not sell any of 12,000 tonnes of crude palm oil offered in an auction as concerns about the possible increase in export tax next month weighed on the market.
"In addition, cooking oil refiners still have ample stocks," said an auction official at the centre which sells palm oil from state plantations. Crude palm oil in several auctions in North Sumatra's Medan was sold at 9,203- 9,257 rupiah ($0.994-$0.999) a kg, down from 9,400 rupiah a kg last week.
Producers in Medan, home to Belawan port, which is the key port for palm oil exports, did not hold any auctions on Friday and Monday. "Production started to climb but demand was still slow and that pulled local prices lower. Also, players have factored the possible increase in export tax," said a dealer at a plantation firm in Medan. Indonesia, the world's top palm oil producer, adjusts the palm oil export tax monthly based on the movement in international prices.
Currently, palm oil is subject to a 15 percent export tax. But traders expect the palm oil export tax will be increased to 20 percent in July. Malaysian crude palm oil futures edged lower with the benchmark September contract ending down 55 ringgit to 3,503 ringgit ($1,077) a tonne on the day.
In Jakarta, refined, bleached, deodorised (RBD) palm olein, which is used as cooking oil, was offered lower at 9,225 rupiah a kg, falling from 9,300 rupiah a kg on Monday. On the export market, sellers offered crude palm oil for delivery in July at $1,130 a tonne, free on board Belawan. Buyers bid at $1,120 a tonne, but no trade was reported.
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