Early 2015 is a sluggish beginning of the world vegetable oil market. According to the FAO, world vegetable oil prices, ranging from seed oils to vegetable oils, experienced the lowest decline. Vegetable oil was recorded at the lowest price level since October 2009. The fall in the price of vegetable oil was due to lower global market demand, reduction of supply to the biodiesel market, low price of world crude oil and the abundance of vegetable oil stocks in producing countries. Such is a written explanation of Executive Director of Indonesian Palm Oil Association (GAPKI), Fadhil Hasan.
CPO price in the global market which continues to decrease could not lift CPO demand in the global market. The volume of exports of CPO and its derivatives from Indonesia in January decreased 8% compared with exports in December last year, from 1.97 million tons in December 2014 to 1.8 million tons in January 2015. When compared by year-on-year, export performance of CPO and its derivatives have increased approximately 240 thousand tons or 15% in January 2015 compared to January 2014 at 1.57 million tons.
Almost all major export markets of Indonesia reduced their demand at the beginning of this year. Particularly, volume of exports to China and India experienced a significant decline. The volume of exports of CPO and its derivatives to China was down 40% from 328.45 thousand tons in December 2014 to 196.84 thousand tons in January 2015, followed by India which decline 39.7% compared to last month, or from 494.72 thousand tons in December 2014 to 298.27 thousand tons in January 2015. Decline in the volume of exports also occurred in the United States at 15%, African countries 8%, and European Union 3.6% compared to the volume of exports last month.
The significant increase in the volume of exports of CPO and its derivatives from Indonesia came from Pakistan, although it is of small quantity. Pakistan recorded a 59%increase in demand or from 78.80 thousand tons in December 2014 to 125.61 thousand ton in January 2015. New Market Potential in the Middle Eastern countries also recorded a 9% increase in demand or from 174.36% thousand tons in December 2014 to 190.20 thousand tons in January 2015. In terms of price, the average price of CPO Global in January 2015 could only move within the range of USD610 – USD707.5 per MT.
Severe floods in Malaysia disrupted harvest, so that supply decreased and this condition is unable to lift prices. Prices fell, especially last week where prices fell to USD610 per MT. Average price in January 2015 was USD669.6 per MT, down 1% compared to the average price in December 2014 at USD677.6 per MT. Meanwhile, prices in the first two weeks of February have started to increase, although it is still difficult to reach USD 700 per MT. Until the end of the month, it will be difficult USD 700 per MT. Until the end of the month, it will be difficult for prices to reach USD700 per MT.
This is because the conditions in Malaysia began to recover after the flood and the falling value of the Malaysian currency against the US dollar. This complicates the increase of CPO in the global market. GAPKI estimated that CPO prices until the end of October will tend to move in the range of USD650 – USD700 per MT. Meanwhile, Export Reference Price in February 2014 is determined by the Ministry of Trade at USD648 and Export Duties at 0% with reference to the weighted average price (CPO Rotterdam, Kuala Lumpur and Jakarta) at USD719.05 per MT. Looking at the trend of global CPO price which decline and move under USD750 per metric ton, GAPKI estimated that export duties for March will remain 0%. (E)
Business News - February 25, 2015