Indonesia has temporarily waives its export levy for all palm oil products until August 31 in an attempt to beef up exports and ease high inventories.

The decision by the world's biggest palm oil exporter could further reduce prices, which have fallen by about 50% since late April to their lowest in over a year.

Indonesian palm oil producers have been struggling with high inventories since the country imposed a three-week export ban through to May 23 to reduce domestic cooking oil prices. Since lifting the prohibition, the nation has implemented rules on mandatory local sales - known as the domestic market obligation (DMO) – to keep produce at home to be made into cooking oil.

Finance Minister Sri Mulyani Indrawati said a progressive palm oil export levy would be applied from the first day of September, with the rate set between 55 and 240 USD per tonne for crude palm oil, depending on prices.

There were 7.23 million tonnes of crude palm oil in storage tanks at the end of May, according to data from the Indonesian Palm Oil Association (GAPKI) on July 15.

GAPKI welcomed the new measure, but recommended the removal of DMO rules until stocks drop to 3 million to 4 million tonnes.