India is Offended by Malaysia, CPO Prices Continue to Rise in Favor of Indonesia

NUSADAILY.COM-JAKARTA – The price of crude palm oil (CPO) at the end of October 2019 surged to 2,300-2,450 Malaysian Ringgit (RM) per ton. This acession is an improvement in prices after sinking into position RM 1,937 per ton on July 10, 2019 ago.
This price improvement may be due to a reduction in Indian palm oil imports from Malaysia.
Reporting from Reuters, India is currently considering limiting imports of some products from Malaysia, including palm oil. This restriction as a reaction to Malaysian Prime Minister, Mahathir Mohamad, who criticized New Delhi for their actions in Kashmir.
Mahathir indirectly criticized New Delhi during his speech at the UN General Assembly Session in New York, United States, 27 September 2019. Mahathir said, India and Pakistan must work together to resolve conflicts in Jammu and Kashmir.
“Traders are confused on both sides. They don’t know how to plan their (palm oil) shipments,” said Sandeep Bajoria, Chief Executive of Sunvin Group, a vegetable oil importer based in Mumbai.
The existence of a policy of reducing palm oil imports from Malaysia is seen to benefit Indonesia. Because buyers in India began to shift their choice to Indonesia. That as an act of securing the supply, “Buyers prefer Indonesian shipping to avoid the possibility of higher duty impact,” Sandeep Bajoria said.
As for October, import contracts mostly have been signed. From November 2019, new imports contracts are not signed with Malaysian sellers.
Even though it is seen as a profit for Indonesia, the price of the new palm oil contract this October (for delivery from November) is still inferior to the CPO selling price in February 2019, which could penetrate 2,460 RM per metric ton for the European market.
According to ISTA Mielke GmbH data, Oil World; US Department of Agriculture; World Bank (link: WORLDBANK.ORG), this increase is also just an “entertainer” of the downward trend in CPO prices over the last five years.
During September 2014 to October 2019, the best price achievement occurred in January 2017, which reached 3,680 RM per metric ton. After this highest achievement, CPO prices continue to fall.
Meanwhile, the Indonesian Palm Oil Producers Association (GAPKI) projects that 2019 Indonesian palm oil production will reach 50 million tons. That way, this year’s production will grow 5.4% from 2018 production of 47.43 million tons.
Until August 2019, Indonesia’s palm oil production reached 13.9% or grew from 30.66 million tons in 2018 to 34.94 million tons. Production until August has reached 68.9% of the 2019 projection.
“(Increased production) because the plants’ productivity is increasing,” said Executive Director of GAPKI Mukti Sardjono to Kontan.co.id, Friday (10/18/2019). (reuters / kontan / yos)

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