KUALA LUMPUR, Oct 6 (Reuters) – Malaysia plans to minimise imports of crude palm oil in an effort to reduce stockpiles of the edible oil to manageable levels of around two million metric tonnes, a government minister said on Tuesday.
The move would add to increased use of biodiesel and a replanting incentive scheme as the government works to manage local stockpile levels, said Amar Douglas Uggah Embas, minister for plantations, industries and commodities.
“There was a projection that Malaysia’s stocks might reach 3 million tonnes by November. If it reaches that level, prices will likely come down and it is an overstock in the country,” Uggah Embas told a media conference.
Malaysia imported about 66,000 tonnes of crude palm oil in August, equivalent to around 3 percent of its 2.05 million tonnes in domestic production.
Uggah Embas said the measure would take effect immediately, but was not a ban as long-term or previously signed contracts would be allowed to continue.
“It will be on a case by case basis,” he said.
Malaysia, the world’s second-largest palm oil producer, imports crude palm oil mainly from neighbouring Indonesia, the biggest producer.
Uggah Embas said the measure to limit imports had been raised with Indonesia at a meeting on Oct. 3, where the two countries agreed to set up a Council of Palm Producer Countries to ensure further industry cooperation and stabilise prices.
“They understand because if our price levels go up or down they will also be affected,” he said.
Malaysian palm oil futures dipped on Tuesday after a rally last month that lifted prices to a 15-month high and shifted demand for the tropical oil to Indonesia.
Palm oil for December delivery on the Bursa Malaysia Derivatives exchange 1FCPOc3 was off 0.6 percent at 2,400 ringgit ($551) a tonne by the midday break.