CPO Prices Edges Lower on Bearish Data - icdx.co.id
  • (05/04 - 12/04) The Prices of Indonesian palm oil in the week fell by 0.07%
  • The fundamentals of CPO are still weighing on palm oil commodity prices

Market Review

The price of the ICDX palm oil contract a week ago was down 5 points to Rp. 7.190 compared to the previous week, which was Rp. 7.195. The weakening in the price of palm oil in the past week was largely influenced by the fundamental factors of palm oil.

Based on a report published by the Malaysian Palm Oil Board (MPOB), Malaysian CPO production in March 2019 increased to 1.671 million from 1.544 million in the February 2019 period. In addition, the end-stock of Malaysian CPO in March 2019 only fell 142 thousand tons to 2.917 million tons, lower than the Reuters survey which predicted a decrease in stock to 2.85 million tons, or the lowest in 5 months.

The still – high stock and the increase in palm oil production have caused commodity prices to weaken. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 2.61% to RM 2.166, from RM 2.224 the previous week.

Meanwhile, the Palm Oil Producer Council (CPOC) conducted a diplomacy joint mission with Malaysia and Colombia in Brussels last week, to hold a meeting to discuss discriminatory measures delegated by the European Union in the RED II Delegated Act. While decisions regarding the RED II Delegated Act will be ratified in the next two months.

Chart - CPO 190415 - icdx.co.id

Price Performance Indicators

Previous Week % Change
CPOTR Rp 7.190 -0,07%
FCPO RM 2.166 -2,61%
SOYBEAN OIL USD 29,02 -0,45%
CRUDE OIL USD 63,84 1,20%
USD/IDR Rp 14.153 -0,04%
MYR/USD RM 4,1200 0,93%

Market View

RED II Kept Effecting CPO Prices

RED II applied by the European Union Commission became the major challenge to Indonesia’s CPO, as one of Indonesia main target export is European Country. The RED II ruled out the used of Biodiesel based CPO as CPO has a higher risk to deforestation, while other vegetable oil is categorized at lower risk. Will this issue effect the Indonesia’s CPO prices in longer term, while at the same time there are an increase of domestic demand for CPO to be used as diesel?

Ramadan to Drive CPO Demand?

Indonesia and Malaysia are heading to Ramadan or fasting month, as the month historically shown a higher demand for CPO, especially to its after-processed CPO products. The fasting is expected to be start at 5th May. Will the month give support to CPO prices, or the prices kept effected by international issue?

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date Data/Events Actual Expectation Previous
16/Apr AR – Inflation Rate MoM 4% 3,8%
17/Apr All –OPEC Meetings
17/Apr US – Crude Oil Inventories N/A 7,0M
24/Apr MY – Inflation Rate YoY 0,2% -0,4%

Source: ICDX Research




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