Jakarta. Shares of Indonesian-listed palm oil producers rallied Monday after the government dropped export levies on all palm oil products and their derivatives until August 31, 2022. 

Gozco Plantations saw its share price increase 8.33 percent to Rp 143 a piece as the trade session closed on the Indonesian Stock Exchange (IDX). Dharma Satya Nusantara shares were up 5.56 percent to close at Rp 494, followed by Astra Agro Lestari (5.32 percent), London Sumatra Indonesia (4.87 percent) and Salim Ivomas Pratama (4.52 percent). 

Minister of Finance Sri Mulyani Indrawati set the export levies for palm oil products to zero last week. Previously, export levies were in the range of $55-200 per metric ton. On September 1, the ministry will reinstate the levies to $55-240 per metric ton.

The ministry dropped export levies in a move to increase exports and reduce the country's high palm oil inventories following the export ban it imposed on the commodities last April. 

The controversial ban only lasted four weeks — from April 28 to May 22 — after showing some results in driving domestic cooking oil prices down. But, the policy also hurt oil palm farmers, who find it hard to sell their palm fruit bunches to processing plants due to excess supply. 

According to data from the Indonesian Palm Oil Association (GAPKI), the national stock of crude palm oil (CPO) as of early July 2022 has reached 7.1 million tons or is on the threshold of overstock. This high stock, in the end, makes the processing plants limit the purchase of palm fruit so that farmers find it difficult to sell fresh fruit bunches (FFB).

Analysts said the temporary abolition of export levies can provide positive sentiment for CPO companies, at least in, the short term as the companies now can keep all most of the proceeds of their exports. 

At today's CPO price of  $870 per metric ton, the companies would have paid $115 for each ton of CPO they export if the export levies were still applied.

"Surely, [the policy] will also drive the performance of palm oil companies and become a positive sentiment for stock price movements on the trading floor," Hans Kwee, the director of Anugerah Mega Investama, said on Monday. 

"Actually, now is a good time to unleash more [CPO] export to compensate for the drop in the commodity's price," he said. According to Bursa Malaysia data, palm oil futures has dropped 55.5 percent from their peak in March.