Excess Supply in Market, Malaysian CPO Price Still Continues Suppressed

By : Abraham Sihombing And Aldo Bella Putra | Wednesday, July 25 2018 - 02:30 IWST

Kebun Kelapa Sawit (Ist)
Kebun Kelapa Sawit (Ist)

INDUSTRY.co.id - Jakarta - Malaysian crude palm oil (CPO) prices are still depressed due to excess supply in the market. Malaysia's palm oil price on Monday (23/07/2018) closed down to position RM2.169 per ton. The price range yesterday was RM2.167-2.208 per ton.

Meanwhile, the contract price of CPO sales for delivery in October 2018 of the Bursa Malaysia Derivatives Exchange fell 1.1% to RM2,169 per ton. The Malaysian CPO price is equivalent to US $ 534.10 per ton.

"Yesterday was the second day of Malaysia's CPO price to decline in a row after last weekend. That is because it is influenced by negative sentiment towards the potential increase in CPO production in the coming weeks, "said Arie Nurhadi, research analyst at PT Monex Investindo Futures, in Jakarta, Tuesday (07/24/2018).

Arie said, the market was worried about increasing CPO production in the coming weeks because the increase in production usually begins in mid-year, where industry players will be divided when the production reaches its peak.

"CPO production in Malaysia is expected to enter a high production cycle in the last quarter of this year. However, annual production may be far from predicted and will peak the next season, "said Arie.

Arie revealed, in addition to negative sentiment towards excess production in the foreseeable future, the decline in Malaysian CPO prices yesterday was also triggered by the strengthening of the Malaysian Ringgit (RM) exchange rate against the United States dollar (US).

"If the RM exchange rate strengthens against the US dollar and other leading currencies, then it will make Malaysian CPO prices more expensive for foreign buyers," said Arie.

Arie said, Malaysia's CPO price in trading Tuesday (07/24/2018) is currently still at the level of RM2,163 per ton. The range of price movement up to now is RM2.158-2.167 per ton. (Abraham Sihombing)

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