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Weak Export Data Hold CPO Price to Rise  - icdx.co.id
  • (19/03 - 26/03) CPOTR price recorded a 1.24% correction
  • Several bullish data were muted on impact

Market Review

Closing the last week of March 2021 with a correction, the ICDX crude palm oil contract price (CPOTR) has recorded a weekly decline of 1.24%, back below the level of Rp 14,000.- per tonne. Although some analysts believe that the long-term reliability of CPO prices has occurred despite a “healthy” correction in the end, the strong fundamental driver can still be traced from the major correction in global crude oil prices.

Still from the pandemic headline, the price of crude oil, which is strongly influencing the price of vegetable oil as its alternative product, has tested for a significant negative headlines. Oil fell by midweek after the US reported a 5% increase in new infections last week, the first increase after 9 consecutive weeks of decline. On the other hand, a number of countries in Europe led by Germany also echoed the same pessimistic tone where some authorities are strongly considering the need for a new lockdown.

Supported not to go even lower, data from Malaysia had come to cheer up the CPO industry with exports of Malaysian palm oil products for the March 1-20 period which were released rising 6.8% to 745,260 tonnes from 697,794 tonnes in the same period the previous month. On the other hand, the shortage of foreign workers in Malaysia and high prices for other vegetable oils as substitutes, also join to provide separate support.

In the future, although it is still corrected on a weekly basis, it is estimated that palm oil prices will still have the opportunity to continue strengthening. According to some analysts, prices will still be underpinned by low stock figures, a slow recovery in production and higher global demand for biofuel production.

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

Price Performance Indicators

Previous Week % Change
CPOTR Rp 13,760
FCPO RM 4,013 +0.30%
SOYBEAN OIL USD 53.87 -2.58%
COFU USD 61.40 -1.01%
USD/IDR Rp 14,434 +0.02%
USD/MYR RM 4.1050 +0.96%

Market View

Indonesian Active Cases Declined, Will It Take into Effect?

It has been over a year since Indonesia got strucked by the COVID-19. Within early this year inoculation program had been running, active cases were also declining from the highest figure reached on early February. For information, the pandemic had caused problem to CPO industries as it had caused a tightening number of worker on plantation and on producing site, thus edged CPO prices haigher as supply seemed to be declined. With the inoculation has been running and active cases is now moving to South, economic condition is expected to recovered soon so that the industry will regain its man power to kickstart the producing activity.

Higher Demand Prospect on Government Run Company

This year, PT Pertamina may run a new project that is expected to impact CPO’s demand. Pertamina is planning to develop the green diesel and green jet fuel. The program will be divided into 2 phases, the first phases will be processing 3.000 barrel of RBDPO (Refined, Bleached, Deodorized Palm Olein) per day starting on December 2021 into green diesel, and consequently processing 6.000 barrel per day of CPO into green jet fuel starting December 2022. Will the program tightened the demand side of CPO and move the CPO prices higher?

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date Data/Events Actual Expectation Previous
29/Mar MY – Exports YoY FEB 17.6% 8.8% 6.6%
1/Apr All – OPEC-JMMC Meetings - - -

Source: ICDX Research




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