Malaysia retained its CPO export tax at the highest band of 8% for the tenth successive month for October shipment after the calculated reference price came to RM4472.46/ton (US$1068/ton) or up RM216.94 from September, rising for the second consecutive month. The duty payable will rise by RM17.36 or US$4.15 per per-ton of CPO exported in October. The rise will not significantly reduce Malaysia’s CPO export competitiveness to Indonesia which is expected to increase the tax rate for October shipment. Indonesia will announce its CPO reference price and the subsequent tax rate next week.

We expect Malaysia CPO reference price to move lower in November in response to the declining price trend as production improve and supply eases. The reference price for October is 29% higher than from the start of the year and 57% above the same period last year. CPKO and RBD PKO are taxed at a flat rate of 10% and 5% respectively.