In the past week, the price of the ICDX palm oil contract rose 1,06%. The increase in CPO prices was influenced by the official launch of B30 last week.
The Indonesian Minister of Energy and Mineral Resources, Ignasius Jonan, accompanied by the Deputy Minister of Energy and Mineral Resources, Arcandra Tahar, officially launched the B30 program in the Road Test using B30 (diesel fuel with a bio-content of 30%) in vehicles with diesel engines. Furthermore, the government will conduct trials on trains, ships, and heavy machinery.
The Government of Indonesia will require the use of B30 starting in 2020. Besides aiming to develop the palm oil industry, the B30 program aims to reduce fuel imports and promote an environmentally friendly fuel to the society.
Meanwhile, the price of CPO contracts in Bursa Malaysia rose 0,65% at the end of last week. This was caused by an increase in CPO imports in India due to lower import duties and lower prices. Imports of refined palm oil in May 2019 jumped to 371,060 tons from 238,479 tons in April 2019 - Solvent Extractors' Association (SEA). In addition, the price increase was also caused by the determination of the export duty on Malaysian CPO for July 2019 which again held at the 0% level, according to a published-rule on the MPOB website.
The G20 – Trade War Meeting
President Trump has confirmed that President Xi will attend the G20 meeting, thus both President will have a meeting in the middle of the G20 Meeting this week. The result of the meeting will be the focus, whether both country will end their tariff war or not. For information, soybean – substitute of CPO, the main product traded between US and China was effected by this issue. Will the meeting’s result contribute to CPO prices this week?
Farmers Wish Government to Revoke the CPO Export Collection
On Sunday, Indonesia Palm Tree Farmers Association wish the government to revoke the rules regarding CPO export collection. For information, as per March, the Finance Minister has ruled out that the lowest boundary of CPO prices which is not worn export collection is $570/ton. The association said that the collection had become an obstacle for CPO prices to rise and causing losses to farmers for the past years. Will this new Finance Ministers rules ease the concern of the association as the Ministers applied higher lowest boundary from the previous rule and contribute to the CPO prices in week ahead?