POINTERS: 2019 Market Landscape - Will the CPO Price Recover?

By: Mr. Oscar Tjakra

Oscar Tjakra is the Executive Director, RaboResearch Food & Agribusiness. He is located in Singapore, and focuses on palm oil and grains and oilseeds sector.

Oscar was previously a RaboResearch Food & Agribusiness Analyst with Singapore branch from July 2008 to October 2010 covering various sectors including grains and oilseeds, sugar, cocoa and animal protein.

In his most recent role, he was Senior Vice President of Freight Research with Oldendorff Carriers Singapore, where he led global supply and demand research of the grains & oilseeds sector.

Oscar holds a Master of Science in Applied Finance from Singapore Management University and Bachelor of Engineering (Hons) from Nanyang Technological University.

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The world oilseeds supplies have grown steadily in the past decades due to increasing oilseeds planting areas and increasing oilseeds yield. The increase of these oilseeds supplies, excluding oil palm, are driven mainly by increasing global demand for oilseeds meals for the production of animal feeds. As a consequence of this, more oilseeds are crushed for their meals, instead of for their oils in recent years, which adds into increasing availability of global vegetable oils supply.

Assuming normal weather, we expect a continuation of the global palm oil oversupply situation, which will result in higher global inventories in 2019. This is mainly the result of an increase in mature palm oil plantation areas in Indonesia and Malaysia, which will continue to provide downward pressure to prices in 2019. In addition, global soft oil supplies in 2018/19 are still expected to be high, on the back of large soybean, rapeseed, and sunflowerseed crops across major producing countries. Availability of these soft oils will provide competition for palm oil demand.

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Questions & Answers (8) :

MOHD RAFIZAN BIN SAMIAN

5 years ago

How can Rabobank assist plantation companies in dire financial states such as FGV, TH Plantation and FELDA to recover from their current financial situation?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Unfortunately due to company’s policy, I’m not able to provide the answer
5 years ago

MOHD RAFIZAN BIN SAMIAN

5 years ago

In your opinion, will the Love MY Palm Oil campaign launched by the MPI Minister earlier this year will have significant impact on the stability of the palm oil price and consumption of palm oil in Malaysia and global markets?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Love My Palm oil is great initiative to create more understanding about palm oil industry and increase palm oil consumption in Malaysia and globally. However, to increase global palm oil consumption in larger scale, we need collective efforts from global palm oil producers to promote more palm oil consumption globally. Increasing domestic palm oil demand through biodiesel mandate in producing countries is one way to increase global palm oil consumption.
5 years ago

HCLeow

5 years ago

Dear Oscar, what is the risk to biodiesel policy if there is a change in Indonesia leadership in the coming Indonesia president election? Is the other candidate also friendly to biodiesel? thank you.

POINTERS SECRETARIAT:
Posted on behalf of the speaker : I think Indonesian biodiesel policy will remain in place, no matter who wins the Indonesian presidential election. Both candidates are friendly to biodiesel. In fact, in recent presidential election debate, both candidates pledged to achieve energy self-sufficiency by increasing the use of palm oil based biodiesel.
5 years ago

Ceanry Ayub

5 years ago

Dear Mr. O. Tjakra, With the endless superior efforts from the EU and the US on anti-palm oil based products, what is your reckon to 2019 CPO price will behave in addition to ongoing trade war between US and China? Will it recover or reaches further rock bottom?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : EU demand for palm oil and palm oil based biodiesel will still be stable this year. If the draft of EU’s commission delegated-act becomes law, we will only see the reduction of palm oil based biodiesel in the EU post 2023. Hence, I don’t think CPO price will break below RM 2,000/tonne in 1H 2019.
5 years ago

Roby Fauzan

5 years ago

If B30 in Indonesia implemented later started by July 2019, to what extent it will drive the price?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : The implementation of B30 mandate in Indonesia will translate to total annual domestic biodiesel demand of ~9 million kilolitres for transportation sector, or ~3 million kilolitres higher than B20 mandate. If B30 mandate is implemented in Indonesia in July 2019, I believe palm oil prices could increase above RM 2,500 in 2H 2019. This is due to larger reduction of palm oil inventories in Indonesia which will result in lower year on year palm oil inventories in Indonesia.
5 years ago

nasihah rashid

5 years ago

Since there is an expectation of oversupply situation which will resulted in higher global inventories this year, what are the measures should be taken by the industry players as well as the government to support the palm oil market ans help those especially in smallholders?

POINTERS SECRETARIAT:
This question has been transferred for the MPOB speaker to answer . Thank you.
5 years ago

Joanne Pun Yin

5 years ago

What are the government initiatives to help the palm oil industry and what are the steps taken by the industries to curb losses due to low CPO price? Will it still be possible for industries to expand their business further in downstream with the current market conditions?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Current low palm oil price environment is caused by oversupply situation which results in high domestic palm oil inventories in Indonesia and Malaysia. To reduce high domestic palm oil inventories level, both Indonesian and Malaysian governments are; increasing domestic biodiesel mandates to reduce high domestic palm oil inventories level and promoting more palm oil exports to traditional and non-traditional destinations. While certain companies still make healthy margins from their downstream operations, overcapacity in palm oil downstream industry remains in the region. It is possible for palm oil companies to expand their business, however it will be in terms of finding new customers as opposed to increasing production capacity.
5 years ago

Saurabh Data

5 years ago

cant open both reports