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Expectations of Decreasing Demand Pressure CPO Prices
Expectations of Decreasing Demand Pressure CPO Prices
Wednesday, 24 April 2024

Price Indicator

Product 

Price

% change

CPOTR

Rp13275

-5.88%

FCPO

MYR3.926

-6.61%

Soybean Oil

$44.36

-2.44%

COFU

$82.14

-4.11%

USD/MYR

MYR4.781

0.08%

USD/IDR

Rp16,249

2.59%

CPOTR Focus:

  • The ICDX CPOTR contract price 4/15 – 4/19 decreased by 5.88%.
  • India's CPO imports decreased by 17.41%.

Market Review

CPOTR price movements experienced a decline in the week to IDR 13,327/Kg, triggered by expectations of a decline in demand weighing on CPO prices.

On the demand side, there is positive sentiment about increasing demand from China. However, other countries seem to be sluggish, as in a report, one market player said, In India, CPO imports have fallen drastically. In November-March, India's CPO imports fell 17.41% compared to the same period the previous year. As a result, the price of CPO is more expensive compared to sunflower seed oil, making CPO less competitive. During the November-March period, India's sunflower seed oil imports skyrocketed 21.04%.

On the other hand, CPO prices were depressed as soybean oil fell. Based on the April edition of the World Agricultural Supply and Demand Estimates (WASDE) report released by the United States (US) Ministry of Agriculture, it appears that demand for agricultural products will decrease. For soybeans, for example, world exports in the 2023/2024 season are estimated at 173.1 million tonnes. Down 0.5 million tons compared to March estimates.

Market View

US Is Spotlighting EUDR Regulations

At its previous meeting, the European Union (EU) Commission on December 6 2022 approved the Deforestation-free Products Act (UU) or EUDR. Laws formed by the European Union (EU) with the aim of requiring due diligence on a number of plantation and forestry commodities. With this new policy, every company that supplies palm oil, beef, soybeans, cocoa, wood and rubber, as well as derivative products such as chocolate, beef and furniture.Currently, the United States (US) and a number of parties in Europe are starting to focus attention on the United States because it is considered to be detrimental to Indonesia and this policy could threaten the sustainability of the industry. This law will close the supply chain entering the area from products that are considered to contribute to deforestation and land degradation. The EU Deforestation-Free Regulation (EUDR) is considered to be one of the challenges that could harm plantation and forestry commodities in Indonesia, one of which is palm oil (CPO).

Currently, the United States (US) and a number of parties in Europe are starting to focus attention on the United States because it is considered to be detrimental to Indonesia and this policy could threaten the sustainability of the industry. This law will close the supply chain entering the area from products that are considered to contribute to deforestation and land degradation. The EU Deforestation-Free Regulation (EUDR) is considered to be one of the challenges that could harm plantation and forestry commodities in Indonesia, one of which is palm oil (CPO).

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data/Events

Actual

Ekspektasi

Sebelumnya

25-Apr

MY - Inflation Rate YoY

-

1.9%

1.8%

25-Apr

US - GDP Growth Rate QoQ

-

3.4%

2.3%

26-Apr

US - Core PCE Price Index MoM

-

0.3%

0.3%

Source: ICDX Research

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