New Indonesian crude palm oil export levy structure set to be effective early July: letter

The projected reduction in Indonesia's crude palm oil export levy will be effective within the first two days of July, according to a document from the finance ministry sent to S&P Global Platts by market sources.

According to the document, dated June 25, the reduction in the levy would be effective seven days from the exercise date, ostensibly rendering it effective on July 2.

However, some market sources highlighted that it was unclear if the document included the June 25 date in the calculation of the seven days.

"Most of us are not sure if its seven days including the 25th or seven days after the 25th, but at least we know the new levy structure is coming into force in early July," one trader said.

The ministry wasn't immediately available for further clarification on the matter June 28.

On June 21, the ministry announced a reduction in the ceiling rate of the CPO export levy by $80/mt to $175/mt when the CPO reference price exceeded $1,000/mt.

However, an implementation date had not been declared in the initial announcement.

Market sources subsequently told Platts that the CPO reference price for July would likely be lowered to $1,094/mt, from $1,223.90/mt for June, as a result of which the export levy would be reduced to $175/mt from $255/mt with the export duty would drop to $116/mt from $183/mt.

According to Anilkumar Bagani, research head of Mumbai-based brokerage Sunvin Group: "Finally the Indonesian government has lowered the export levy as this has been anticipated by the market for a long time. While it will allow Indonesian offering to be more competent than before, we may not see a tectonic shift in the trade flows as Indonesia export levies and duties still total $291/mt, compared to the Malaysian export duty of around $92/mt. Furthermore, the market has expected these changes for a long time now and they are almost priced in."