The price of Palm Oil decreased due to Malaysian CPO export data for July 1st – 31st 2018 decreased to 1,030,909 metric ton compared to June 1st – June 30th 2018 at 1,058,832 metric ton. In addition, Palm Oil prices fell due to Indonesian CPO production data for 1st Semester 2018 increased by 23.00% to 22.32 million metric ton compared to 1st Semester 2017 at 18.15 million metric ton
In the world market, vegetable oil production as the substitute product was also increased for the 1st Semester 2018, especially the soybean oil produced by Brazil and the United States. The trade war that took place between the United States and China caused obstacles to the export of soybeans to China and resulted an oversupply of soybeans to non-China markets. The high amount of vegetable oil inventories suppressed the price of vegetable oils including the Palm Oil.
On the other hand, the escalation of the trade war that took place between the United States and China will affect the demand for Crude Palm Oil and its derivatives. If the trade war between the two countries continues, the exports of Indonesian Palm Oil to China are predicted to increase.
Indonesia to increase Local Demand for Palm Oil
The government is planning to accelerate the use of fuel of B30 (Biodiesel 30) to 2019 from the initial plan in 2020, while the government also planned to expand the use of B20 biodiesel to the non-subsidized sector and will be implemented in August 2018. These 2 regulations were expected to increase the local demand of crude palm oil. Will the regulations limit the local CPO price from moving lower?