Oil palm is not the only
commodity whose piece is sluggish, because other vegetable oils are also
experiencing the same thing, such as soybean, rapeseed, and sunflower seed. As
stated by Executive Director of the Indonesian Palm Oil Association (GAPKI),
Fadhil Hasan, in his press conference on Tuesday (October 21), the weakening of
commodities price was due to weak purchasing power, production increase and
abundant stocks.
In terms of price, the average CPO price in Rotterdam in
September 2014 is in the range of USD 680 – USD730 per MT with average price of
USD 712 per MT. Price is down about 5,4% compared to the average price in
August at USD 753 per MT. Daily price of CPO in the global market (CIF Rotterdam)
is continuously decline starting the first to the third week of October, where
prices move in the range of USD 695-USD 730 per MT.
World vegetable oil prices that continue to weaken,
including crude palm oil (CPO), is not able to stimulate Indonesian CPO
exports. This is reflected in the export performance of CPO and its derivatives
from Indonesia in September 2014. Exports of CPO and its derivatives in
September only reached 1,685 million tons, down 1.6% compared to the previous
month at 1.72 million tons. Export performance year-on-year from January to
September 2014 was also down 1.72 compared to the same period last year, i.e.
from 15.3 million tons in September 2013 to 15 million tons in September 2014.
The decline in export performance is due to the weak purchasing
power of export destination countries (China and India). Although prices are
ready low and export duties are also lower than the previous month, it was not
able to increase Indonesia’s CPO exports. Weak demand from export destinations
was due to economic slowdown in major export destination countries, and prices
of other vegetable oils were also low (soybean) so that CPO as substitute oil
cannot compete.
In September, the volume of Indonesia’s palm oil exports
to India was down 185 thousand tons, or 38% compared to last month, from 490
thousand tons in August to 305 thousand tons in September 2014. The performance
of Indonesia’s palm oil exports to India year-on-year was down 26% from 4.5
million tons in January – September 2013 to 3.3 million tons in the same period
in 2014. The decline in the performance of experts to India was due some
reasons, such as the Indian government plans to raise import duty for palm oil
imports, weak Rupee exchange rate against the US dollar, and high inflation in
India.
The same thing happens in China. The volume of palm oil
exports in September 2014 only reached 56.26 thousand tons, down 31% compared
to last month at 81 thousand tons. Export to china year-on-year was down 10%
from 1.77 million tons in January-September 2013 to 1.60 million tons in the
same period in 2014. Sluggish demand from China is because of the same reason
as India, which is the difficulty to obtain bank loan. In addition, china also
issued a new regulation on standards for pesticide residues, including edible
oils. The volume of Indonesia’s palm oil exports to the European countries also
decreased 12% from 341 thousand tons in August to 302 thousand tons. The same
thing happened in Pakistan where exports fell 7% from 194 thousand tons in
August to 181 thousand tons in September 2014.
What is interesting is that the volume of exports to the
United States, where in September 2014 the volume of exports to the United
States increased 86% from 36,9 thousand tons in August to 68.8 thousand tons in
September 2014. This is interesting because soybean production in South America
is abundant and soybean prices are cheap.
Until the end of the month, the price of CPO is predicted
to stagnate. GAPKI predicted that CPO prices until the end of October will tend
to move in the range of USD 700 – USD 730 per MT. Meanwhile, in October 2014,
Export Reference Price is determined by the Ministry of Trade at USD 640 and
export duty at 0% with reference to the heightened average price (CPO
Rotterdam, Kuala Lumpur, and Jakarta) at USD 710 per MT. Looking at the trend
of global CPO prices that move below USD 750 per MT, GAPKI estimated that
export duty for October will remain 0%. (E)
Business News - October 24, 2014
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