Sunday, 12 October 2014


Deputy Minister Bayu Krisnamurthi signaled that, in view of the recent CPO price development of CPO most probably the Ministry of Trade would stipulate export tax in October at Zero percent. This was based on the consideration that the export regulation which had been in effect so far the price kept moving down so export tax would be set at zero percent, he stated in Jakarta on Tuesday [23/9].

The condition was already predicted by GAPKI. As set forth by the Executive Director of GAPKI Fadhil Hasan in Jakarta on Monday [22/9] who stated that trading of vegetable oil was constantly losing steam, it affected price of Indonesia CPO. GAPKI predicted that price of CPO by end of September would be in the range of USD 700 – Rp. 750 per MT.

Meanwhile CPO export price in September 2014 was stipulated by the Ministry of Trade at USD 739 and Export Tax with reference to CPO price Rotterdam, Kuala Lumpur and Jakarta USD 810,63. In view of downturning trend through and of August till the first 2 weeks of September, GAPKI estimatedthat CPO reference price would be below USD 750 so BK for September would drop to 0%.

Today vegetable oil of the world was in a low state by demand and price. CPO was on the downturn to the lowest point in the pat 5 years. Price of palm oil was low, just like other vegetable oil especially soy based oil. Price of soy oil weakened due to over supply and excess of stock for the next few months, and golden harvest of soy in the USA.

The same was with Repesheed. Strangely price of Rapesheed weakened because of to late harvest in Canada due to high rainfall. Sunflower seed: harvest was predicted to be sooner, close to the record of last year what caused price of Sunflower seed to drop in the past few weeks.

Palm Oil: the Situation Today.

In the world market, palm oil was the determinant factor of other vegetable oils. World’s demand for vegetable oil through August dropped by 10% against July. Increased production prospect in southeast Asia and low import by China and India, competitiveness soy oil price, strengthening of Malaysia’s Runggit, weakening of world’s crude oil price and sufficient stock in buyer countries caused CPO price to sink deep.

Fallen CPO price to the bottom level in the past 5 years did not automatically jack up export, as demand was low. Export volume of CPO and by products in August 2014 dropped by 7% compared to last month from 1.84 million tons in July to become 1.72 million tons in August 2014. Indonesia’s CPO performance this year was not as bright as predicted. Global CPO price which dropped steeply was north enough to jack up export”

By year on year export of CPO and by products was posted to drop by more than 2% compared to last year [from 13.69 million tons per August 2013 to become 13.37 tons per August 2014]. Downturn of Indonesia’s export was also due to external and internal factors. Other factors at home was increase consumption and growing downstream industry.

External factors that caused CPO export to drop was economic slowdown in China and India, falling currency value against USD and emerging alternative oils that made palm oil to be mere substitute oil.

Export of CPO to China nose dived by 70% from 138 million tons next July to become 81 thousand tons in August. Among the reasons was that the Government of China was applying Particide Residue Standard. Downturn of export was also posted to African states 89%, Bangla Desh 51% and Uni Europe 24%.

This August the countries which booked export increase was only India and Pakistan. India posted increase of 17% from 407.8 thousand tons to become 409.2 thousand tons. Meanwhile Pakistan booked increase of 29% from 137.7 thousand tons in July to become 194.4 thousand tons in August.

Price of CPO in Rotterdam by August 2014 was around USD 695 – USD 815 per MT with average price of USD 753 per MT. This average price was downturn. This average price of USD 843.3 per MT in July.

CPO average price at the world market [CIF Rotterdam] was constantly eroded since seconds were of August to end of month. This September price of CPO was constantly down and in the first 2 weeks only moved around USD 680 to USD 710 per MT.

By end of the month price of CPO was predicted stagnate, even if there was increase it would nort be significant as stock of other vegetable oils was plentiful and price was competitive so price of CPO would not be up. (SS)

Business News - September 26, 2014

No comments: