Price Performance Indicators

Focus CPOTR:

• ICDX 3/10 – 7/10 CPOTR contract prices increase by 4.41%
• Estimated increase in Indian purchases due to IDR0 tariffs bring up CPOTR

Market Review

Price movements in CPOTR are experiencing an increase of 4.41% in a week to the level of IDR10,660/Kg. In the circulating news according to the average estimate of six trading company dealers, the country of India carried out Imports of Indonesian and Malaysian palm oil in September to the highest level in a year with an estimated 21% jump from last month to 1.2 million tonne, the highest compared to the same month last year, due to strong demand ahead of the festival season added to the positive catalyst in vegetable market. In addition, Rajesh Patel, Managing Partner at GGN Research assessed that “palm oil is almost $300 per tonne cheaper than rival soybean oil for September delivery, so it is common for refiners to increase purchases.” Rajesh added “Projections for this October, India's palm oil imports will remain strong, around one million tonnes, as steep discounts continue.” Larger purchases could help Indonesia's top producer trim swelling inventories and help to push CPO prices further.

Indonesia began to waive levies imposed on exports of palm oil products from mid-July to help reduce excess stockpiles following a government-issued three-week export ban in late April designed to stabilize local cooking oil prices. The export exemption with a tariff of Rp0 applies from July 15 to August 31, 2022, the Government has also extended the exemption from the export levy on CPO and its derivatives until October 31, 2022 as stated in the Minister of Finance Regulation (PMK) Number 130/PMK.05/2022. However, on (4/10) Minister Airlangga Hartarto said "The government is considering eliminating PE BPDPKS which has been extended from previously only until the end of August 2022 to the end of October 2022. Now, it is possible that the plan is extended until the end of 2022."

Market View

Expectations of Tightening Interest Rate Policy by The Fed

Further CPO prices are still overshadowed by recessionary sentiment which is likely to reduce demand as central banks in other countries raise their benchmark interest rates, one of which is the central bank of the United States (US), The Fed, at some point in time. then raised the benchmark interest rate by 75 basis points (bps) to 3%-3.25% and became the highest position since early 2008. In addition, hawkish comments from Fed officials on the incoming policy meeting in November to suppress the inflation rate which is considered still within the high level made the performance of the US Dollar soar to the level of 113,000. Market participants assess that the aggressiveness of the central bank is predicted to slow down economic growth and send the global economy into a recession zone, which in turn will affect CPO prices further.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research