Lunar New Year, China's CPO Demand Predicted to Increase Rapidly

INDUSTRY.co.id - Jakarta - The price of crude palm oil (crude palm oil / CPO) of Malaysia has an opportunity to increase in trading Thursday (04/01/2018). Malaysia's CPO price increase was boosted by increased demand from China and other vegetable oil price increases.

On Wednesday (03/01/2018), Malaysia's CPO price on the Malaysian Commodity Exchange rose 2.9% to 2,606 ringgit per ton. That is the highest increase over the past nine months.

The increase is in anticipation of the CPO price increase that occurred at Chicago Board of Trade of 0.9% for March 2018 delivery contract. In addition, the price of soybean oil yesterday for May 2018 delivery also increased 0.2%.

"CPO demand from China will usually rise ahead of Lunar New Year next month. Therefore, the vegetable oil traders in China are starting to anticipate the increase in demand since the beginning of this year in order to increase the price," said Faisyal, an analyst at PT Monex Investindo Futures commodities in Jakarta, Thursday (04/01/2018).

In addition, Faisyal said, futures market traders in Kuala Lumpur believe the global vegetable oil market is currently reacting to anticipated increases in exports in the future.

"That's because Malaysia's CPO exports have increased between 6-9% in December 2017. Meanwhile, the export increase is predicted to continue throughout January 2018 due to increased demand from China," Faisyal said.

As is known, China is the second largest CPO importer in the world after India. Traders in China will increase their CPO reserves ahead of Lunar New Year to anticipate an increase in demand for cooking.

Until now, the price of Malaysian CPO is in the range of 2,480-2,630 ringgit per ton. In the near future, CPO price is expected to continue to strengthen to break the level of 2585 ringgit per ton before reaching its resistance point at 2,630 ringgit per ton.

"However, the price of new CPO is likely to decline if the price has been reduced to 2,520 ringgit per ton, before finally dwindling at its support point at 2,480 ringgit per ton," Faisyal added. (Abraham Sihombing)