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UPDATE 1-Indonesia extends palm oil export levy waiver to Oct. 31 - trade minister

(Adds trade ministry official comment, details)

JAKARTA, Aug 24 (Reuters) - Indonesia has extended to Oct. 31 a policy of not collecting levies for palm oil exports, Trade Minister Zulkifli Hasan said on Wednesday amid efforts to prop up farmers' prices for fresh palm oil.

Indonesia started waiving palm oil export levies from mid-July and the policy was due to run until the end of this month. A maximum $240 per tonne export levy for crude palm oil was due to take effect in September before the latest change.

The decision was taken to help encourage exports of palm oil and prop up prices of palm oil fruits for farmers, Zulkifli told members of parliament in a hearing.

The world's biggest palm oil producer is struggling with a massive build-up of stocks following a three-week export ban in May.

Although shipments have resumed and authorities have tweaked the associated tax policies, exports have so far remained slow, with the result that storage tanks are near capacity and prices are down.

The latest data from the Indonesia Palm Oil Association showed inventory stood at 6.68 million tonnes at the end of June, compared with around 4 million tonnes at the end of 2021.

"We must encourage exports while still maintaining the balance for domestic supply," Trade Ministry senior official Syailendra, told Reuters separately, adding that a Finance Ministry regulation will be issued with details of the latest policy.

Indonesia collects export levies, on top of a separate export tax, to fund subsidies for its biodiesel and smallholders replanting programmes.

Earlier this month, the Finance Ministry issued a new regulation which lowered the threshold for applying export tax on crude palm oil to a reference price of $680 per tonne, down from $750 per tonne previously.

(Reporting by Fransiska Nangoy, Bernadette Christina Munthe; Editing by John Geddie and Kanupriya Kapoor)

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