Home
>
News
>
Publication
>
Oil Catalyst Compete and El Nino Support CPO Increase
Oil Catalyst Compete and El Nino Support CPO Increase
Wednesday, 03 January 2024

Price Performance Indicators

Product 

Price

% change

CPOTR

Rp11860

0.08%

FCPO

MYR3.721

-1.12%

Soybean Oil

$48.18

0.37%

COFU

$71.34

-5.21%

USD/MYR

MYR4.584

-1.08%

USD/IDR

Rp15,411

-0.45%

CPOTR Focus:

  • ICDX CPOTR contract price 26/12 – 29/12 experienced an increase 0.08%.
  • Estimation Malaysian palm oil production will fall by 8.59%.

Market Review

CPOTR price movements experienced an increase in the week to IDR 11,860/Kg, triggered by strengthening oil prices due to competition for a share in the global vegetable oil market as well as continued concerns about the El Nino phenomenon until the first half of 2024 in the Asian region which might endanger rice supplies. wheat, palm oil and other agricultural products in some of the world's major agricultural exporters and importers.

From 2023 the government will begin implementing a program to mix palm oil-based biodiesel into diesel oil at 35% (B35). On 25/12 Secretary General of the Ministry of Energy and Mineral Resources Dadan Kusdiana said "Utilization of this fuel has started since February 1 but is still relaxing but as of August 1 it has started 100%". The government itself has set the biodiesel allocation for B35 in 2023 to reach 13.15 million Kilo Liters (KL). With the implementation of B35, Indonesia is considered to be the country that is most consistent in implementing green energy in the world.

On the other hand, Indonesia said it would impose fines of 4.8 trillion rupiah ($310.1 million) on palm oil companies operating inside forest areas. Maritime Affairs and Investment Ministry official Firman Hidayat said more than 475 billion rupiah ($30.7 million) in fines had been issued so far. It should be remembered that Indonesia previously issued regulations in 2020 to regulate the legality of plantations operating in areas that should be forests, with the aim of improving governance in the sector.

Meanwhile, market players are waiting for the Malaysian CPO report in December. The Malaysian Palm Oil Association estimates that Malaysian palm oil production will fall by 8.59% between 1 - 20 December 2023. Apart from that, market players are also waiting for the export report for the period 1 - 25 December which is expected to fall by 4%. In December, Malaysia decided to maintain the export tax rate for crude palm oil at 8% and increase the reference price by RM 3,589.09 per ton compared to the previous 3,556.08 per ton.

Market View

La Lina Phenomenon in 2024

The Meteorology, Climatology and Geophysics Agency (BMKG) predicts that Indonesia will experience the La Nina phenomenon in 2024. La Nina is where the sea surface temperature in the central Pacific Ocean cools below normal conditions. This cooling of sea level reduces the potential for cloud growth in the Pacific Ocean and increases rainfall in the Indonesian region in general. The La Nina phenomenon can have an impact on crude palm oil (CPO) production, which really depends on the intensity and timing of the rainfall, because it can affect the process of harvesting fresh fruit bunches (TBS).

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data/Events

Actual

Ekspektasi

Sebelumnya

2-Jan

MY -  S&P Global Manufacturing PMI

47.9

-

47.9

3-Jan

US -  ISM Manufacturing PMI

47.4

46.7

47.1

3-Jan

US - JOLTs Job Openings 

8.79M

8.852M

8.85M

4-Jan

US - FOMC Minutes

-

-

-

5-Jan

US -  Non Farm Payrolls

-

170K

199K

Source: ICDX Research

Member of
© Indonesia Commodity & Derivatives Exchange (ICDX)
Join Our Monthly Newsletter
Follow Us
Contact Us
Midpoint Place, 22nd Floor, K.H. Fachrudin Street No. 26, Tanah Abang, Jakarta Pusat
+62 21 4050 7788