The price of Palm Oil decreased due to Malaysian CPO export data for July 1st – July 10th 2018 decreased to 257,096 metric ton compared to June 1st – June 10th 2018 at 334,132 metric ton and Malaysian CPO production data for January - June 2018 increased to 8,919,856 metric ton compared to January - June 2017 at 8.716.184 metric ton.
Palm oil is one of the most important commodity in Indonesia. Palm oil exports declined and this can be seen from the volume of CPO exports, which decreased by 3% to 2.33 million tons in May 2018 compared to April 2018, which was at 2.39 million tons. The decline in CPO exports was due to the trade war between the United States and China. China has reduced the soybean imports from the US, so that the US soybean stocks are abundant and China still has plenty of CPO supplies until now. The abundant stocks suppress all types of soybean oils, including palm oil. Market participants hope that the Indonesian government will make a policy to raise domestic consumption of CPO by raising the use of biodiesel.
Malaysia to Lower its Export Tax to 4.5%
MPOB stated last Wednesday that the export tax for crude palm oil for August will be lowered to 4.5%, compare to 5% export tax in July. The move is expected to stimulate the demand of crude palm oil which affected by the trade war between U.S. and China that supressed the demand of edible oil.
Expansion of Indonesia B20 Utilization
Darmin Nasution in collaboration with Industrial Ministry is expected to have a plan to overcome currently deficit trade balance. One of the way is to optimize the usage of B20 diesel, this move is in accordance to absorb crude palm oil domestic supply and to support the price of CPO. B20 utilization is planned to be used in wider non-PSO sector, such as diesel power plants or any automotive sector.