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Weak Export Data Hold CPO Price to Rise  - icdx.co.id
  • (18/10 – 25/10) The price of CPO products in ICDX for a week rose by 3,61%
  • Malaysia-India rising tensions are expected to open up opportunities for Indonesia's CPO Export

Market Review

The price of ICDX palm oil contracts in the past week rose 3.61% to the level of Rp 7.470, - from Rp 7.210, - in the previous week. The rise in CPO prices was influenced by the strengthening of global CPO prices.

Last week, the Malaysian Derivatives Exchange again posted its new highest price this year at 2.452 ringgit / ton. Based on the AmSpec Agri report, Malaysian Crude Palm Oil (CPO) delivery grew 0,6 percent from the previous month to 922.977 tons during 1-20 October 2019. CPO products also received positive sentiment from the issue of Malaysia on cutting its CPO export tariffs in January 2020.

The price of the ICDX palm oil contract continues to rose amid tensions between Malaysia and its main CPO importer, India. Tensions rose following a statement from Malaysian Prime Minister, Mahathir Mohamad criticizing India's attitude towards the conflict in Kashmir through the UN general conference. Responding to this, news circulated that India plans to limit palm oil imports from Malaysia.

Furthermore, the Gabungan Pengusaha Kelapa Sawit Indonesia (GAPKI) recorded the national export of crude palm oil (CPO) and its derivative products during January-August 2019 grew by 22,7 million tonnes or 3,8 percents compared to the same period in 2018. In detail, exports of palm oil derivative products such as lauric, refined palm oil, biodiesel and oleochemicals grew to 2,328 million tonnes for the August period compared to the previous month of 2,238 million tons.

Weak Export Data Hold CPO Price to Rise  - icdx.co.id

Price Performance Indicators

Previous Week % Change
CPOTR Rp 7.470 +3,61%
FCPO RM 2.398 +4,85%
SOYBEAN OIL USD 30,96 +1,98%
CRUDE OIL USD 56,66 +5,18%
USD/IDR Rp 14.064 +0,01%
USD/MYR RM 4.186 -0,54%

Market View

B30 Implemented Early 2020

The road test of B30 biodiesel is expected to finished at the end of October 2019, while temporary results shown last August were positive. Within the implementation of B30 biodiesel, the program will be able to absorb 8-9 million tons of CPO or around 18-20% of yearly CPO production total or twice bigger than current stock. Will the mandated program help to revive up the Indonesia CPO prices amid some unresolved issue such as the European ban on CPO products?

India-Malaysia in Heating Relationship

The people of India has run a boycott to Malaysia’s CPO products after statements at United Nations, PM Mahatir Mohammad said that New Delhi had “invaded and occupied” Kashmir in an event at UN. Responding the issue, a major Indian vegetable oil trade body called on its 875 members to avoid buying CPO from Malaysia. The moved has been rising the confidence that the India will alter their CPO products into Indonesian’s CPO products. Will the issue further upgrade the demand of Indonesia CPO prices in week ahead?

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date Data/Events Actual Expectation Previous
30/Oct US – Crude Oil Inventories -1,7M
31/Oct MY - PPI YoY -0,9% -1,9%
31/Oct BR – Interest Rate Decision 5,0% 5,5%

Source: ICDX Research




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