The price of Palm Oil dropped due to Malaysian Palm Oil Board (MPOB) data regarding Malaysian production data for August 2018 increased by 7,92% to 1,622,231 metric ton compared to July 2018 at 1,503,220 metric ton and Malaysian CPO reserves data for the month of August 2018 increased by 12,40% to 2.49 million ton compared to the month of July 2018.
In addition, the decrease in CPO prices is also caused by the trade war intensity between the United States and China. The ongoing trade war between the two countries has led to market concerns, especially over the possibility of the increase of US import tariffs policy on China. Anxiety will arise in new US obligations on China’s imports. This indicates a large escalation of the trade war for the two countries. US President Donald Trump said that he would raise tariffs on imported goods from China worth USD 267 Billion. Previously, the US government announced that they would impose USD 200 Billion tariff on imported goods from China. President Trump’s uncompromising attitude towards China caused little opportunity for settlement between the two countries. Additional tariffs by the US will trigger a revenge from China.
U.S-China Trade War May Kept CPO Market Dim
As the U.S. still continues the tariff war with China, with the latest issue that U.S. will slap duties on virtually all Chinese imports. For the record, U.S. has already imposed 25% tariff on $50 billion worth of Chinese goods. The issue had already affected the price of soybean oil prices – one of the biggest trade products between U.S. and China. The soybean prices, which is highly correlated with other vegetable oils, may impact the CPO price in the near future if the U.S-China issue is heightened.