Price Performance Indicators

CPOTR Focus:

• CPOTR ICDX contract price 4/17 – 4/21 increased by 1.50%
• Malaysian palm oil inventory at the end of March decreased by 21.08%
  

Market Review

The CPOTR price movement increased by 1.50% in a week to a level of IDR 13,915/Kg due to plans to add workers to oil palm plantations in Sarawak and reports of a decrease in Malaysian palm oil inventories which supported the strengthening of CPO prices.

From Malaysia, oil palm plantation companies in Sarawak are currently allowed to recruit foreign workers from several other countries such as Bangladesh, Nepal and the Philippines besides Indonesia according to the Deputy Minister of Sarawak in the Prime Minister's Department. Based on the circulated news, Malaysian Palm Oil Council said Sarawak had the largest oil palm planted area of ​​around 1.62 million ha, accounting for 28.6% of the country's total planted area of ​​5.67 million ha by the end of 2022. This was an increase of 16,113 ha compared to Sarawak owns almost 1.61 million ha by 2021, with plans for an additional workforce in Malaysia making it possible to increase CPO production which could push up prices further. In addition, the Malaysian National Palm Oil Council reported that Malaysia's palm oil inventories at the end of March fell 21.08% from the previous month to 1.67 million tonnes compared to market estimates of 1.77 million tonnes, this figure being the lowest since June last year.

Within the country, the Minister of Trade Zulkifli Hasan set a Reference Price for palm oil products for the determination of Export Duty (BK) and Export Charges (PE) for the period April 16-30 2023 of USD 932.69 per MT. This value increased by USD 34.40 or 3.83 percent from the period April 1-15 2023 which was recorded at USD 898.29 per MT. This increase in the reference price was influenced by the factor that there was an increase in demand for CPO along with the improving economy condition in the main CPO importing countries, namely China and India, as well as a decrease in CPO supplies in Malaysia.

The negative sentiment that has contributed to depress CPO prices came from the EU Parliament having approved the regulation of the EU Free Deforestation Act (EUDR) on 19 April 2023 and is awaiting official approval from EU countries before it comes into force. After the law went into effect, large and small companies were given 18 months and 24 months respectively to comply with various requirements in the regulation. Companies that do not comply with these rules can be fined up to 4 percent of the company's turnover. With the existence of this law, it is necessary for EU countries to guarantee products that are sold such as palm oil, beef, soybeans, coffee, cocoa, wood, charcoal, and rubber, as well as derivative or processed products such as meat,furniture, paper, leather, and chocolate not related to forest destruction or degradation.

Market View

Policy of Substituting Vegetable Oils in India

Indian country state has reduced CPO imports by around 400,000 tonnes and replaced them with sunflower and soybean oil. India implemented the policy for the April-June 2023 period. India has chosen to cancel its purchase of 75,000 tonnes of palm oil for the first time in years and switch to rival oil, with which India is the world's largest palm oil importer in 2022, thereby providing influence on demand from global CPO.. One Indian Industry official said Palm oil is usually traded at a discount compared to rival oils, but import restrictions by major Indonesian producers have helped push palm oil prices to a premium, making sunflower oil and soybean oil more expensive. attractive to buyers.

The Malaysian Palm Oil Council (MPOB) expects higher exports of palm oil and palm-based products to China this year due to cooperation in the palm oil trade through the recent signing of a memorandum of understanding (MoU) in Beijing. It is hoped that this signing will further expand cooperation between the two countries in the palm oil trade. MPOB Director General Datuk Dr Ahmad Parveez Ghulam Kadir (26/4) said the institute was successful in expanding the use of palm oil in the value-added food industry through research and development initiatives, helping secure commodity supply and the Malaysian palm oil market.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research