Price movements in CPOTR increased by 10.15% in a week to the level of IDR 12700/Kg. In news circulating Russia is seen to be backing down on the Ukraine-Russia grain export deal or the so-called Black Sea deal, this deal to ease the global food crisis on wheat, sunflower oil and fertilizers. The deal involved Turkey and the United Nations as mediators and guarantors of the agreement last July. This initial agreement was previously only set for the last 120 days, with the option to be renewed on 19 November if neither party objected to this agreement. Towards the end of the Ukraine-Russia grain export agreement, Russia's statement complained against this agreement, because Russia had difficulties in shipping its grain and fertilizer products due to sanctions imposed by the West. Russian Ambassador to the United Nations Vassily Nebenzia said that Russian exports must be allowed first, before they're-committed to continuing with the extension of the second deal. Market participants are assessing the possibility of Russia pulling back on a grain export deal, even though shipments of sunflower oil have been hampered since the Russia-Ukrainian conflict began. This could raise concerns about supply for other global vegetable oils, so market players prefer to use CPO, which is a substitute product for other vegetable oils, thus supporting CPO prices further.
From the domestic side, Indonesia has been exempting CPO export levies since mid-July to encourage export activities. However on (1/11) the Government decided to extend the policy of exemption from export levies for crude palm oil until the end of this year, until the price CPO reference is greater than or equal to 800 US dollars per metric ton (MT). Coordinating Minister for the Economy Airlangga Hartarto said "Once the price reaches US$800 per tonne, the zero levy will no longer apply." This policy has an influence on the exporter side to continue purchasing Indonesian CPO with lower taxes compared to rival producers.
Daily Covid-19 Cases in China Region Rise
On (7/11) China reported its highest daily Covid-19 case in six months at more than 5600 daily cases, despite strict lockdowns that severely disrupted manufacturing, education and livelihoods daily. China has a zero-Covid policy, where tightening will be carried out to reduce the transmission rate to level 0 when there is a spike in cases. However, Beijing over the weekend fended off hopes that China's strict zero-Covid policy might be eased in the near future. This causes the Chinese economy growth to slow down. So that the demand for commodities has decreased including the demand for Indonesian CPO considering that China is the second largest importer of the need for crude palm oil commodities.
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Source: ICDX Research