Price Performance Indicators
CPOTR crude palm oil price at ICDX has closed last week trading session with a correction of 3.40% from the level of 16,035 at previous week's close (14/05) to the level of 15,490 at last week (21/05). The main pressure can be traced from a combination of profit-taking in the market regarding peak price conditions, the concerns of Covid-19 in various Asian countries, which in parallel also triggered a collapse in global crude oil prices.
From the headline, a number of countries in Asia, mainly contributed by India as the largest importer of palm oil, are still busy with the even distribution of the areas hit by the second wave of COVID-19. Not only that, Malaysia also experienced the same thing. The daily case of C-19 in Malaysia reaches 6,000 people per day, which leads to the re-implementation of the lockdown - a major threat to the level of public consumption. Especially in the food, beverage and travel sectors, which mostly absorb the need for palm oil as their raw material. These two headlines also had an equal impact on world sentiment, and in the end the world crude oil price also responded such way.
However, analysts think that the decline that occurred could be much deeper, but managed to be supported by a little positive sentiment related to data on palm oil trading activity. Data on Semenanjung Selatan Malaysia production facilities is released to be corrected at 18% compared to the previous month for the period of May 1st-15th. On the other hand, according to a surveyor AmSpec Agri Malaysia said that Malaysian palm oil exports in the first 20 days of May rose 16% compared to the same period last month.
Most Recent Malaysia’s Pandemic Headlines Contributing to CPO’s Downfall
A number of new regulations were released by the Malaysian Government to control community activities amid the increasing cases of Covid-19 transmission in the country. As reported, business activities will only be allowed to operate from 8:00 a.m. to 8:00 p.m. daily starting May 25, 2021. In addition, 80% of civil servants and 40 private workers will be required to work from home. The rule is estimated to affect the working activities of 7-8 million workers in the country. Will this issue cause the CPO price to fall deeper or will the CPO price decline occur temporarily as the effect of the month of Ramadan has diminished?
US – Crude Oil Inventories
MY – Exports YoY/April