CPO price weakness is temporary, says Commodities Minister

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KUCHING, Oct 3: The weakness in crude palm oil (CPO) prices is only temporary as demand from top consumer China is expected to pick up once it gradually relaxes its Covid-19 restrictions, says Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin.

She said although CPO prices have come off their peak levels which exceeded RM8,000 per metric tonne (MT) in March 2022 when the Russia-Ukraine conflict sparked a shortfall in sunflower oil, Kenanga Research has forecast “a still decent” average CPO prices of RM4,500 per MT for 2022 and RM4,000 per MT in 2023.

She also said production costs may be pushed up by rising fertiliser, labour and transportation costs but all-in-all, costs should stay within the RM2,000 to RM2,500 per MT range, translating to still rather healthy upstream margins for the plantation sector.

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“As it is, both palm oil (circa 35 per cent market share) and soybean oil (circa 25 per cent share) remain the main edible oils in the world market although palm oil production has peaked while the US soybean harvest has just started for 2022.

“Therefore, planters—both large corporations and smallholders—must have faith in the golden crop given demand for edible oil has been growing steadily for decades supported by rising population, affluence and more urban lifestyle,” she said in a statement today.

Zuraida further said that Malaysia’s plantation sector has progressed with many larger concerns having already embraced environmental, social and governance (ESG) principles as part of their day-to-day operations. 

A testament to its success is that about 16 million MT of palm oil is now Malaysian Sustainable Palm Oil (MSPO)-certified as well as meeting some of the highest ESG standards for agriculture produce worldwide. 

“As observed by Kenanga Research, the better managed plantation groups are not resting on their laurels but pushing towards even higher palm oil yields of 6 MT per hectare which is about 10 times more efficient than other oil crops.

“In the upcoming 2023 Budget which will be tabled on Oct 7, the Ministry of Plantation Industries and Commodities (MPIC) is pushing for a fundamental shift in strategy by focusing on intensive, yield and investment-driven growth in line with the increasing emphasis on sustainability by major producing nations and consuming markets,” she emphasised. — DayakDaily