Indonesia’s CPO prices tended to fall last week. The decline in CPO prices was affected by sentiment from the release AmSpec Agri Malaysia, Malaysia’s CPO exports in October fell 12,90% to 1.393.850 tonnes from 1.600.441 tonnes in September.
The issue of the China-US trade war that has occurred in the past few months caused China to import less soybeans with high tariffs, and also affected the price of CPO as its substitution product.
In addition, China’s third quarter GDP data grew only 6,5%, lower than the second quarter of 6,7%, this contributed to fears of an economic slowdown, weakening global commodity prices, including CPO.
CPO prices were also affected by falling oil prices after the release of world crude oil stock data last week. Based on data released by US EIA, production reached 11,3 million barrels per day in August, the first time of the US production rate reached 11 million barrels per day.
Meanwhile, CPO prices were also slightly supported by the IPOC conference last week, President of Indonesia mentioned some policies in order to boost CPO prices, including the use of technology for CPO sustainability, and also rejuvenation of palm oil plantation.
India to Reduce Palm Oil Import Duties
India has already signed an agreement with ASEAN crude palm oil producers’ country to lower its Palm Oil Import duties by 4%, so that import duties for crude and refined palm will be at 40% and 50%, respectively. For the record, in July, India imported more than 600k ton of palm oil and palm kernel oil from Indonesia and India’s higher import duties has been hurting South East Asia crude palm oil market. The agreement of lower import duties will be effective as of 1st January 2019. Will this decision supports the price of Indonesian CPO?
Indonesia Applied 0/MT Export Duties
For November, the Indonesia Government applied the CPO reference price at $578.34/ton, this reference price is 3.98% lower compare to October reference price, which was set at $602.34/ton. As for this lower price, the government applied a 0/MT export duties to boosts demand from international buyer. Will this decisions support the CPO price? For the record, the CPO price had been hit hard since Q3 2017 with many actions have been taken to boost the CPO demand.