[KUALA LUMPUR] Malaysia has surpassed Indonesia to become the biggest crude palm oil (CPO) exporter to top consumer India in 2020/21, after Indonesia imposed heavy taxes on exports of the edible oil last year, industry officials told Reuters.

Malaysia's palm oil exports to India surged 238 per cent to 2.42 million tonnes in the first seven months of 2020/21 marketing year started on Nov 1, according to data compiled by The Solvent Extractors' Association of India (SEA), a trade body of Indian vegetable oil refiners and traders.

During the period, Indonesia's palm oil shipments to India fell 32 per cent to 2 million tonnes.

It comes after Indonesia imposed higher levies on crude palm oil exports in December to raise funds for its ambitious palm-based biodiesel programme, aimed at maximising domestic use of the edible oil.

Indonesia's export levies have been at their highest level for five months in a row, according to trade officials.

"Malaysian planters are benefiting from Indonesian export levy. They are gaining market share by offering palm oil at discount over Indonesian supplies," said BV Mehta, executive director of the SEA.

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Malaysia's rising shipments to India, however, would soon be capped as Indonesia is set to trim export taxes, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.

Indonesia's Finance Minister Sri Mulyani Indrawati said on Monday the government would cut the ceiling rate for CPO levies to US$175 per tonne from US$255, without providing a timeframe.

Top producer Indonesia charged duty and levies of US$438 per tonne on palm oil shipments in June. By comparison, June export duty in rival Malaysia was nearly US$90.

That helped Malaysian exporters to offer palm oil at a substantial discount even after retaining healthy margins, said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

Malaysian exporters offered discounts as big as US$100 per tonne in May but are now offering a smaller US$25 discount as Indonesia is set to reduce export levies, dealers said.

The eventual cut in the export levy could help Indonesia regain market share, said Mr Singh.

"With the markets taking a sharp fall of over 25 per cent in (the) last 2 weeks and also discussions on reducing Indonesia oil levies, the shift back to Indonesia may happen soon," Mr Singh said.

REUTERS