Exports of Indonesian palm oil may drop to 1.51 million metric tonnes (MT) in February, a 5.6 percent decline from January. Importers prefer to buy the commodity in Malaysia where the government has put in place a duty free tariff on its palm oil exports in order to reduce large stockpiles. Indonesia, on the other hand, has a nine percent export duty as the government tries to gain more revenue out of its natural resources.
Global palm oil prices have increased by 3.4 percent this year as demand rises while both stockpiles and production shrink.
The world's palm oil production is dominated by Indonesia and Malaysia. Together, both countries account for around 87 percent of total palm oil production worldwide. Although in the past Malaysia was the world's top producer, in recent years Indonesia has emerged as the largest producer and exporter of this commodity.