Indonesian and Malaysian CPO prices rose due to the positive sentiment of an increased in demand from Middle Eastern countries in the month of Ramadhan. An increase in the prices of CPO tends to happen every year during Ramadhan until Eid Al Fitr.
The price of Palm Oil increased due to Malaysian CPO production data for April 2018 decreased to 1,558,337 metric ton compared to March 2018 at 1,573,957 metric ton and Malaysia’s CPO production in May 2018 is projected to decrease by 14.30% MoM as per May 1st – 20th 2018.
Meanwhile, the election of Mahathir Mohammad as the Malaysia’s new Prime Minister brings fresh air to the CPO price movement. Mahathir Mohammad did not question the One Belt One Road (OBOR) program, which is an infrastructure development planned to be financed by Chinese investment. This gives a positive impact on maintaining the Malaysian and Chinese trade relations, especially for the exports of Malaysian CPO to China.
Indonesian Biodiesel to move B25 Formula
The B25 is expected to replace the current B20 Formula of biodiesel – meaning that the ratio between biodiesel to petroleum will be raised into 25:75 from 20:80. The regulation was planned to be issued early next year. The regulation will open a chance to increase the consumption of CPO products. Meanwhile, the market, currently, focuses on Ramadhan month that normally increase the demand of edible vegetable oil.
Crude Oil Fell in 5-Day Streak
Recently, CPO price rose tracking down the rise of crude oil price as the crude oil is used as feedstock to make biodiesel. For that matter, note that the crude oil WTI had already fell from around $72/barrel to $66/barrel. Could this crude oil movement affected the price of CPO?