Increase in CPO Stocks Pressures Prices

The price movement of CPOTR decreased during the week to IDR 12,680/Kg due to expectations of abundant production and pressure from competing vegetable oils.

From the Malaysian side, recent news on October 7 indicated that the Malaysian Palm Oil Council (MPOC) observed that palm oil exports to the European Union (EU) remain stable in the long term and will continue to be an important market for Malaysian palm oil despite the challenges posed by the EU Deforestation Regulation (EUDR). Approximately 90% of palm oil or palm oil products exported to the EU are sustainable, alleviating concerns about the sustainability certification of products entering the EU.

On the supply side, the Malaysian Palm Oil Board (MPOB) reported that Malaysia's CPO stock in June rose by 4.35% from the previous month to 1.83 million tonnes. This is the highest level since February.

Adding further pressure on prices, CPO prices are also weighed down by the prices of other vegetable oils. When the prices of competing vegetable oils are lower, the advantages of using CPO diminish.

On the domestic front, the Indonesian Palm Oil Entrepreneurs Association (GAPKI) on July 5 addressed a "black campaign" by India, stating that it has not significantly impacted Indonesia's crude palm oil (CPO) exports to the country. The black campaign, conducted by artists or celebrities in India, involves publicizing various studies linking the negative impact of palm oil on health and promoting "No Palm Oil" as part of a healthy living campaign. To restore the image of Indonesian palm oil, the Indonesian Government, along with GAPKI, the Malaysian Palm Oil Council (MPOC), and the Council of Palm Oil Producing Countries (CPOPC), have coordinated with the Asian Palm Oil Alliance (APOA). The alliance of palm oil-consuming countries in Asia has agreed to conduct a positive campaign for palm oil in India.

Market View

Latest Agreement between Malaysia and China

Malaysia has secured palm oil trade deals worth more than RM230 million during Deputy Plantations and Commodities Minister Datuk Chan Foong Hin's recent working visit to China. Four Memorandums of Understanding (MoUs) were signed between Malaysian palm oil companies and companies in China at the China International Cereal and Oil Industry Summit. The agreement will involve expanding trade in palm oil products.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date	Data/Events	Actual	Ekspektasi	Sebelumnya
15-Jul	US - Fed Chair Powell Speech	-	-	-
18-Jul	MY - Balance of Trade	-	MYR 17B	MYR10.0B
18-Jul	MY - Exports YoY	-	-	7.1%
18-Jul	MY - Imports YoY	-	-	13.4%
19-Jul	MY - GDP Growth Rate YoY		3.5%	4.2%

Source: ICDX Research