Soybean Price Increases To Be Positive Sentiment For Malaysian CPO Price

By : Abraham Sihombing And Aldo Bella Putra | Thursday, February 08 2018 - 19:00 IWST

Kebun Kelapa Sawit (Ist)

INDUSTRY.co.id - Jakarta - The price of crude palm oil (CPO) potentially continues to increase in trading Thursday (08/02/2018). It was supported by soybean oil price hikes and weakening of Malaysian Ringgit (RM) exchange rate.

"Nevertheless, the rise in CPO price is expected to be limited because demand for CPO is still not seen to increase," said Faisyal, Research Staff & Market Analyst at PT Monex Investindo Futures, in Jakarta, Thursday (08/02/2018).

Faisyal said the price of CPO contract for April 2018 shipment on Malaysia Derivatives Exchange rose 0.6% to RM2,485 per ton. CPO price yesterday rose 1.6% to the position of RM2.510 per ton. It is the highest price since January 30, 2018 because it follows the movement of other vegetable oil price increases, including soybean oil.

Faisyal said the price of soybean oil for delivery in March 2018 at the Chicago Board of Trade (CBOT) closed up 0.2% on Wednesday. It was buoyed by buying and optimism that the US parliament may soon renew its biodiesel tax credit to $ 1 a gallon.

"In addition, the rise in soybean oil prices is also supported by dry weather that hampers crop yields in Argentina and heavy rains that slow down crops in Brazil," said Faisyal.

The price of soybean oil for May 2018 delivery at Dalian Commodity Exchange also closed up 0.5%.

At 1130 GMT, the Malaysian Ringgit rate weakened 0.4 percent to 3.9260 per US dollar. A weaker Ringgit exchange rate will make the price of palm oil cheaper for the owner of the other currency.

According to a Reuter’s survey, Malaysia's CPO export volume is expected to fall by 8% in January 2018 to 1.31 million tons while reserves at the end of January 2018 are expected to rise 0.6% to 2.75 million tons.

Faisyal predicts CPO prices will strengthen in the short term and can touch the price level of RM2.520 per ton. CPO price increase trends can be seen if the price of these commodities can penetrate RM2.500 per ton.

"Vice versa. If the price of CPO reaches RM2,460 per ton, then it indicates a trend of falling prices. The downward trend will continue to reach the lowest price level of RM2,430 per ton," Faisyal concluded. (Abraham Sihombing)