Crude palm oil prices expected to rise in 3Q 2022, to stay strong in 4Q

Harvested oil palm fruits. — file pic

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KUCHING, July 25: The average crude palm oil (CPO) price for 3Q 2022 is projected to range between RM4,800 and RM5,200 per tonne, says Plantation Industries and Commodities Datuk Zuraida Kamaruddin.

In a statement today, she said the daily CPO price has declined to RM3,631.50 per tonne or 24.9 per cent on July 15, 2022 from RM4,838.50 per tonne on July 1, 2022.

The lower CPO prices were influenced by numerous factors which include weaker soybean oil (SBO) prices in view of production recovery stemming from normal weather conditions in major producing countries and lower palm oil exports in June following competition from Indonesia as the country eased its export ban to encourage shipments in its quest to reduce high palm oil inventories.

It was also caused by higher global vegetable oil supply following Indonesia lifting the palm oil export ban and higher CPO production in June 2022 in line with seasonal trends.

“However, on a positive note, with the resumption of the Indonesian palm oil export levy beginning September 1, 2022 and with the expected decline in palm oil production in 4Q 2022, CPO prices for the final quarter of this year are strongly expected to range higher at between RM5,000-RM5,500 per tonne,” said Zuraida.

She said the recent move by Jakarta to scrap its export levy for all palm oil products until August 31 in a fresh attempt to boost exports and ease high inventories would imply that CPO prices are likely to remain weak for most of 3Q 2022.

“This is inevitable in light of stiffer competition from Indonesia—the world’s largest palm oil producer—in its quest to flush out as much excess palm oil possible from its existing stockpile,” she said.

CPO prices rose by 55.9 per cent to RM6,330.00 per tonne during the January-June 2022 period from RM4,061.50 per tonne in the same period a year ago.

The higher CPO price during that period was influenced by higher prices of soybean oil (SBO) in the world market.

Zuraida pointed out that palm oil prices are influenced by the price performance of other vegetable oils, especially SBO as they compete for a share in the global vegetable oils market while palm oil stocks remained at manageable levels below 2.0 million tonnes throughout January-June 2022.

Other factors leading to high CPO prices were firmer Brent crude oil prices in the world market which made palm oil a more attractive option for biodiesel feedstock; and concerns over disruptions of vegetable oil supply from the Black Sea region following Russia’s invasion of Ukraine.

From June 2020, CPO prices started to show an upward trend and in fact, between January 2021 and June 2022 alone, CPO prices have on several occasions broken its all-time high record.

“The Ministry of Plantation Industries and Commodities (MPIC) has been actively monitoring developments in the industry and will continue to ensure that palm oil, which is the country’s main commodity, continues to remain a major contributor to national economic growth, benefiting all, especially smallholders and industry players.

“We have remained relentless in our efforts to rebut and correct any misconceptions raised by those out to discredit the goodness of palm oil via their anti-palm oil campaigns. I have personally headed numerous trade missions to several countries to meet industry players there and create a greater awareness on the numerous benefits and uses of palm oil, apart from being used as cooking oil,” said Zuraida.

Moreover, the ministry through its agencies and councils will be holding the Malaysia International Agricommodity Expo and Summit (MIACES) from 26 to 28 July 2022 at MITEC, Kuala Lumpur which will see participation from 39 countries.

“It is also one of the efforts to promote the agricommodity sector of the country. It also can promote Malaysia as an international hub for agricommodity activities,” Zuraida said.

She said MPIC will continue to implement various campaigns and programmes around the world to promote the use of palm oil and play a leading role globally to spread the benefits of palm oil.

“MPIC will also refute and correct any misconceptions spread to exacerbate the benefits of palm oil through anti-palm oil campaigns mobilised by certain parties,” said Zuraida. — DayakDaily