The CPOTR price movement decreased within a week to the level of Rp. 10,765/Kg, this was still triggered by extreme hot weather which made the market worried about major impact of El Nino weather conditions on global vegetable oil supplies.
Previously market players saidPalm oil production has increased significantly this year, and is expected to continue to increase in the next nine to 12 months, before the potential for a strong El Nino begins to affect current production.El Nino is a warming of Pacific waters that usually causes drier conditions in Asia, limiting the yield of some crops such as palm oil, rice and wheat.The threat of El Nino could cause drought in palm oil plants in Southeast Asia, thereby potentially producing palm oil in Southeast Asia.
GAPKI General Chair Eddy Martono said the worst possible impact of this year's dry season is the possibility of late harvest. "Regarding the prolonged dry season, it will not affect production this year. "It could cause a late harvest," during a virtual press conference regarding the implementation of IPOC 2023, which will be held on Tuesday (3/10/2023). On the same occasion, GAPKI Secretary General Hadi Sugeng said that the long dry season would have an impact on production if farmers did not implement best practices on their respective plantations. If so, the impact on production could be seen in the next two years. Hadi Sugeng continued, "In July 2023 CPO and PKO production will increase by 17% and pIn the same period, the volume of palm oil exports increased significantly by 33% or around 19.8 million tons. However, the export value decreased by 18% to IDR 260 trillion compared to the same period last year."
There are Obstacles to CPO Due to the Geopolitical Conflict in the Middle East
The increasingly heated geopolitical situation in the Middle East is increasing global market concerns, giving rise to obstacles to world crude oil prices and not to mention the prices of other vegetable oils including CPO prices.
The escalation of tensions in the Middle East with the participation of the US in the conflict between Israel and Hamas means that the conflict has the potential to spread. In addition, signals of additional supply from Venezuela in the near future also weighed on further price movements for oil and vegetable oils, including CPO.
However, on the other hand, diplomatic efforts from various countries to reduce the conflict limited further price movements. President Joe Biden on Thursday (19/10) called on America to spend billions of dollars more to help Israel fight Hamas, while Israel's defense chief told his troops to be ready to go to the Gaza Strip for a ground offensive. Israeli Defense Minister Yoav Gallant told troops massing on the Gaza border that they would soon see the Palestinian enclave from the inside, indicating that a ground invasion with the aim of wiping out Hamas was possible. During an eight-hour visit to Tel Aviv on Wednesday, Biden attempted to broker a deal to get aid into Gaza but achieved limited success with an agreement that only 20 truckloads of aid supplies could cross into the enclave.
USD - Chair Powell Speaks
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Source: ICDX Research