Jakarta, CNBC Indonesia – Palm oil prices (crude palm oil/CPO) the benchmark was observed to have surged on Thursday (3/3/2022), following the increase in other commodity prices.
The price of CPO again scored a new high (all time high/ATH) today, in the midst of the still heated tensions of the Russia-Ukraine conflict that have an impact on world sunflower oil exports.
As of 13:35 WIB, the price of CPO on the Malaysian stock exchange for the May 2022 contract jumped 4.35% to the level of MYR 6,950/ton. The strengthening of CPO prices today made the local commodity from Malaysia and Indonesia posted an increase of 16.49% on a weekly basis and 47.97% on a year-to-date basis (year-to-date/YTD).
The rebound in CPO prices today occurred amid expectations that buyers will turn to tropical oil to compensate for the cessation of exports of Black Sea sunflower oil which was disrupted by the crisis of the Russia-Ukraine conflict.
Backlog exports in Indonesia due to the DMO (Domestic Market Obligation) regulation, in which this regulation requires cooking oil producers to sell 20% of their products locally, which also supports prices.
Until now, tensions between Russia and Ukraine and Western countries are still ongoing, where the United States (US) is preparing for further sanctions targeting more Russian oligarchs and their companies and assets.
As a result of Russia’s ongoing war against Ukraine, Ukraine’s export infrastructure, such as ports and other export facilities, has been severely damaged and of course the parties involved have suffered substantial losses.
Meanwhile Western sanctions have hit Russian supplies and raised concerns over long-term supply disruptions.
“Even if the war stops, sanctions on Russia may not be lifted soon. It will take some time for ports to reopen and the next sunflower planting may not be what it used to be,” UOB Kay Hian said in its daily research report. Reuters.
The impact of the war that disrupted the export of Black Sea vegetable oil has also made the biggest vegetable oil buyer or importer in the world, namely India, ask Indonesia to cut production for biodiesel and they also ask to increase Indonesia’s CPO exports to India.
Meanwhile, traders in India are not offering crude sunflower oil because the Ukrainian ports are closed. The Black Sea accounts for 60% of the world’s sunflower oil production and 76% of exports.
From another vegetable oil market, namely soybean oil, heavy rains that occurred in the agricultural region of Argentina helped reduce concerns about a prolonged drought affecting the soybean harvest period after the beginning of this year.
But observers say that if the intensity of rain is still high enough, then this will also affect soybean harvests.
From the price movement, soybean prices on the Chicago Board of Trade rose 1.3%, while the Dalian soybean oil contract price also shot up 1.3%, and the Dalian palm oil contract price jumped 2.9%.
CNBC INDONESIA RESEARCH TEAM
(chd / vap)
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