Price Performance Indicators

CPOTR Focus:

• The ICDX CPOTR contract price 18/3 – 22/3 experienced an increase of 2.46%.
• Malaysian Palm Oil stocks experienced a decline in February.
  

Market Review

CPOTR price movements increased within a week to IDR 13,330/Kg, triggered by the release of lower Malaysian supplies and production.

On the supply side, the Malaysian Palm Oil Institute (MPOB) noted that Malaysia's CPO stock in February fell by 5% compared to the previous month to 1.92 million tons, the lowest since July of last year. The decrease in supply was caused by lower seasonal production in February. Production in February also experienced a significant decline of 10%, reaching 1,259 million metric tons. Additionally, export demand decreased by 24% to 1,015 million metric tons due to major buyers slowing down palm oil purchases amidst higher palm oil price increases compared to rival oils. Malaysia's domestic demand reached 377,572 metric tons. Imports of palm oil jumped by 10% to 32,556 metric tons compared to the previous month.

One factor that also supports CPO prices is the perception of tight supply because CPO-producing countries such as Indonesia and Malaysia experienced a long dry season due to the El Nino phenomenon last year. However, in 2024, it looks like the dry season will not be as severe as 2023. This was stated by the Meteorology, Climatology, and Geophysics Agency (BMKG).

Domestically, the implementation of Biodiesel 35, which has been effective since mid-2022, has increased palm oil consumption by 17.68%, namely from 9.048 million tonnes in 2022 to 10.65 million tonnes last year. With the implementation of B35, according to Gapki, CPO consumption for biodiesel during 2023 will exceed consumption for domestic food.

Market View

Market Expectations on Changes to the DMO DPO Scheme

In the circulating news, there is a government discourse to change the domestic market obligation (DMO) scenario for crude palm oil (CPO) to be based on calculating production performance to fulfill raw materials for the domestic cooking oil industry. The DMO and domestic price obligation (DPO) policies are implemented to provide a guaranteed stock of cooking oil raw materials in the country so that the price of cooking oil is more affordable for the wider community.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research