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CPO Prices Rose on Indonesia’s DMO and DPO
CPO Prices Rose on Indonesia’s DMO and DPO
Wednesday, 02 February 2022

Price Performance Indicators

Product

Previous Week

% Change

CPOTR

Rp 18,420

0.44%

FCPO

MY 5,628

6.23%

Soybean Oil

$65.27

4.12%

COFU

$84.81

0.47%

USD/MYR

MY 4.188

0.07%

USD/IDR

Rp 14,347

0.26%

CPOTR Focus:

  • In a week (24/01 – 28/01) the price of ICDX’s CPO moved higher 0.44%.
  • The CPO prices kept higher amidst DMO and DPO applied.

The ICDX’s CPOTR moved higher 0.44% on the past week, amidst Indonesia domestically set rules for local markets. With the Domestic Market Obligation (DMO) applied to supply the local market and also Domestic Price Obligation (DPO) which applied so the CPO sold locally must not exceed Rp 9,300.00.

By applying the DMO, CPO exporter must show their proof of selling CPO domestically in order to gain approval for export permit. These actions were to overcome the high prices for both CPO and OLEIN-Veg Oil which previously surged to around Rp 20.000/liter, with high demand of CPO products spurred the rising prices.

Meanwhile, the demand from local seen to be solid as the B30’s program, and also statement from GAPKI that B40 program should be postponed that previously thought could be used to fight higher prices were rejected - showing that the government commitment to secure local's demand.  With the used of B40, local demand for CPO products may be higher and thus creates a higher prices on CPO.

Market View

B40 to DMO to Move the CPO Prices

Government were ready to run a road test in order to publicly used the B40 bio diesel. The used of B40 biodiesel may create a higher demand from domestic side and further absorb the local’s CPO stock. Other than the B40 road test, the Domestic Market Obligation may cause the International CPO prices to shoot up as lower CPO stock to be able absorbed by other country. The DMO may cause lower supply to other consumer country such as China, India, and Pakistan, and pushing them to use other edible oil.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data/Events

Actual

Expectation

Previous

All Week

CN - Holiday

-

-

-

2-Feb

OPEC - JMMC Meeting

-

-

-

Source: ICDX Research

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