- May 14, 2019
- Posted by: admin
- Category: Daily News
- CRUDE palm oil (CPO) is trading near its lowest level at MYR1,985 a tonne, dropping 19% y/y.
- Quoting a Maybank Research report, the current spot CPO price is a little above cost, which is expected to cause most companies to record a substantial decline in earnings in 1Q19. But the cheaper CPO also encourages more purchases.
- CGSCIMB palm oil research analyst Ivy Ng was quoted as saying the low price and more aggressive government policy like the biodiesel mandate helped to clear stocks and improve CPO prices.
- Demand for palm oil has also increased because of the African swine fever and the 25% import tariff on American soybean in China, she said.
- Higher demand for palm oil by major importers China and India led to increased CPO exports of 2% m/m and 8% y/y to 1.65 million tonnes in Apr 19.
- The Star also reported that industry association data show shrinking palm oil output, easing concerns over high inventories and rising production.
- Malaysian Palm Oil Board data reportedly showed that production fell 1.4% m/m in Apr 19 to 1.65 million tonnes, while inventories fell 6.6% m/m to 2.73 million tonnes.
- Meanwhile, Malaysia together with Indonesia, the two largest palm oil producers and exporters are fighting alongside a European Union plan to phase out palm oil use in biofuels by 2030.
- Primary Industries Minister Teresa Kok accused the EU of launching a “trade war” against producing nations like Malaysia and Indonesia and threatened retaliatory action at the World Trade Organisation (WTO).
- International Trade and Industry Minister Darell Leiking said the cooperation began with both parties issuing statements and taking joint action to handle the ban by the European community.
- He also said that Malaysia would only stress on the good aspects of palm oil and will not speak negatively of the products of other nations.
- He added that India and the African countries were potentially buyers of Malaysian palm oil.
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