Malaysia has raised its tax on crude palm oil (CPO) exports to 5% for April, ending an 11-month period of CPO being shipped out tax-free. Malaysia is the second highest producer of palm oil, after Indonesia and this hike in export duty could create a dent in the exports. It could also drag the benchmark Malaysian prices of this tropical oil, which hit one-month highs amid output uncertainties due to a crop-damaging El Nino. Traders have reacted very pessimistically on this duty hike policy. Big plantations will be rushing to take out CPO from the country and put pressure on domestic figures and supplies and take exports higher before the tax kicks in. The exports are expected to come down after the duty comes into effect.
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