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Jakarta, CNBC Indonesia – Price of crude palm oil (Crude palm oil/ CPO) The February 2019 Malaysian Derivatives Exchange contract fell 0.3% to MYR 1.966 / tonne at the close of trading on Tuesday (27/11/2018).With this move, prices of Malaysian and Indonesian agricultural products could not increase after the 3.5% drop recorded yesterday. As a result, CPO prices reached their lowest level in 39 months or since the end of August 2015.In addition to low import demand, the prices of the funds have also been influenced by the Indonesian government's policy of temporarily abolishing the palm oil export levies.
READ: Because export levies without RI, clear prices for OPC 3.5%
Malaysian exports of palm oil products are reported to be down 2.6% on a monthly basis (month by month/ MtM) to 1.04 million tonnes between November 1 and November 25, based on freight surveys conducted by Intertek Testing Services.
According to another survey conducted by the General Society of Surveillance (SGS), the country's palm oil exports also fell by 1% MtM, to stand at 1.07 million. tons during the same period. Both survey results show that the country's palm oil exports have not been able to recover after a 14.1% fall in MtM in October. This sluggish demand then confirms concerns about weak demand from market operators by the end of 2018. The weak demand is explained by soy oil stocks in India (the world's largest CPO importer), which are currently significant, thus reducing demand for CPOs. Meanwhile, demand from Europe and China is also reduced due to the ongoing winter. For the record, palm oil will solidify in cold weather.Secondly, the negative sentiment that has become a big risk for CPI prices has been the policy of the Indonesian government, which has set the export levies of TPOs at USD 0 per tonne, namely dinolkan, at the following the lower price of this product. Meanwhile, the export levy mechanism decided by the BPDP-KS Steering Committee is as follows:
So far, the existence of export levies in Indonesia has helped the prices of made in Malaysia more competitive.
With the "liberalization" of export levies in Indonesia, even the country's CPO producers may find themselves in a more profitable position, or at least equal, compared to Malaysian producers. As a result, this situation risks making Malaysian PCO exports more depressed.The good news, the CPO's weakening prices today is even lighter than yesterday's trade correction. The price of the CPO seems too cheap, forcing investors to take steps to buy (technical rebound) In November, mutual fund prices weakened by an additional 8%. Meanwhile, in 2018, the price has collapsed by 21% more. Mutual fund prices also fell close to the cost of producing plantations in Malaysia. As a result, this can force producers to reduce sales to avoid excessive losses. This situation could then reduce the supply on the market and could finally slightly support the prices of UCIs today. (CNBC INDONESIA RESEARCH TEAM)
(RCMP / gus)
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