CPO Prices Move Bullish Waiting for Realization of Opening of Indonesian CPO Exports

CPOTR prices rose 3.88% to IDR 22,745/Kg at the close of trading last week. Prices on CPO fluctuated after the government lifted the ban on exports of CPO and its derivatives which was implemented on April 28. The government announced (19/5) the plan to reopen the CPO export faucet starting Monday, May 23 2022.

However, market players are still waiting for the realization of the implementation of the above policy. This is because the implementation of policies in Indonesia often changes rapidly.

Meanwhile, from Malaysia, CPO exports surged by 30% for the period 1-20 May, this data indicates the demand for CPO in the global market is strengthening.

From the vegetable oil market, the Indian government plans to waive import duties for soybean oil and sunflower oil until March 2024. This news is a positive catalyst for the price of vegetable oil which is a substitute product of CPO. In addition, the ongoing Ukrainian conflict has also boosted vegetable oil prices.

Market View

From within the country, Indonesian President Jokowi announced plans to remove the ban on exports of CPO and its derivative products starting Monday, May 23, 2022, but the government will still reimpose the Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO) on May 31, 2022 to ensure the availability of domestic products is sufficient and the price of cooking oil becomes affordable. The Coordinating Minister for the Economy, Airlangga Hartanto, said (20/5) that the government had set 10 million cooking oil consisting of 8 million tons of cooking oil and there was an availability of supply or reserves of 2 million tons.

From the overseas side, news circulating that COVID-19 cases in China are starting to decline so that the Chinese government plans to lift the lockdown in the city of Shanghai in full starting June 1. This news has become a positive sentiment towards CPO prices, considering that China is the second largest importer of CPO after India, so that the reopening of the lockdown in China has the potential to trigger an increase in CPO imports by China.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date	Data	Actual	Ekspektasi	Sebelumnya
25/05/2022	MY - Inflation Rate YoY APR	2.3%	2.2%	2.2%
25/05/2022	MY - Inflation Rate MoM APR	0.2%	0.4%	0.3%
25/05/2022	MY - Leading Index MoM MAR	0.4%	0.3%	0.6%

Source: ICDX Research