The tax was exempted for most of last year -- from May 1 to Dec 31 -- but it was reinstated at a rate of five per cent in January this year.
Palm oil trader David Ng said this was a welcome move as Malaysia's palm oil inventory rose to more than two million tonnes in April and production increased to a six-month high amid COVID-19 which had impacted traders’ demand.
"Despite COVID-19’s impact around the world inadvertently eroding global demand for palm oil, Malaysia's exports grew in the first 15 days of May 2020,” he told Bernama today.
Ng said the prices would likely be supported with expectations of better exports.
"With the seeming recovery of palm oil, the zero-rated tax would taper off the current stockpile that Malaysia possesses.
"CPO prices would likely trade between the RM2,050 support level and RM2,180 resistance level,” he said.
For the week just ended, the market was traded mostly higher on better demand in view of dissipating COVID-19 worries.
On a Friday-to-Friday basis, the CPO futures contract for May 2020 rose RM55 to RM2,115 per tonne, June 2020 improved RM82 to RM2,116 per tonne, July 2020 increased RM71 to RM2,091 per tonne, and August 2020 added RM66 to RM2,089 per tonne.
Weekly turnover rose to 190,424 lots from last Friday’s 183,886 lots while open interest increased to 265,004 contracts from 263,659 contracts.
On the physical market, the CPO price for May South was RM73.50 higher at RM2,096 per tonne.
Did you find this article insightful?
100% readers found this article insightful