CPO price rallied to a three month high – hit last November, on CPO solid demand. The rally had been supported by the rise of Malaysian Palm Oil demand, which rose 6% in January to 1.5 million tons.
Another reports also helped the CPO price to rise, that the total exports of Indonesian palm oil is expected to rise to 2.74 million tons in January, up from 2.51 million tons in December.
Higher expected demand from South Asia of edible oil were also kept the price of crude palm oil on track. Especially for Crude Palm Oil, imports to South Asia is expected to rose to more than 15 million tons in 2017/2018 period, rose from around 14 million tons in 2016/2017 period.
Meanwhile, to support India’s local farmers, the government rose its import tax of crude palm oil and others refined edible oil products to a more than record decade high and causing the CPO price to close slightly lower at the end of the week.
Chinese in Record Buying Soybean Oil
China vegetable oil’s import, except palm oil, are set to rise in 2017/2018 period. For the record, China’s soybean import in 2017 hit an all-time high of 95.54 million tons. Meanwhile, based on the data from U.S. Department of Agriculture, the Chinese palm oil imports will stay stagnated around 4-5 million tons, on the contrary, the Chinese is set to rise its production on soybean oil to 14-15 million tons in 2017/2018 period. With the data represented, demand for palm oil products are threatened to experience reduction.
Higher Import Tax of CPO in India-Indonesia’s Biggest CPO Trade Partner
To protect India’s local farmers, last week India’s government rose its crude palm oil import tax to 40% from 30% and other refined palm oil tax to 54% from 40%. These tax is recorded as the highest tax applied on CPO in India in a decade. The tax is feared to threat the Indonesian CPO demand and affected the CPO price and producer in Indonesia.