The world’s two largest crude palm oil (CPO) producers and exporters, Indonesia and Malaysia, are expected to maintain their zero percent export tariffs for CPO in January 2015 according to Dorab Mistry, Executive at Godrej Industries Ltd (India's leading manufacturer of oleochemicals), in an interview to international news agency Reuters. Authorities in Malaysia (since September 2014) and Indonesia (since October 2014) have implemented duty-free CPO shipments in an effort to boost global CPO demand and prices.

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Exports of Indonesian crude palm oil (CPO) and its derivatives may increase to 21.6 million tons (collecting about USD $16.0 - 17.3 billion in foreign exchange) in 2015. Meanwhile, Indonesian CPO production is estimated to reach 32.5 million tons next year while the CPO price is estimated to range between USD $740 - 800 per ton. However, provided that the Indonesian government will extend its current zero export tariff scheme for CPO exports, then the country’s CPO exports are expected to accelerate.

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Exports of Indonesian crude palm oil (CPO) and its derivatives increased 45.8 percent month-on-month (m/m) to 2.47 million metric tons in October 2014 primarily supported by the zero export tariff that was implemented by the Indonesian government per 1 October. Indonesia has a mechanism that when the average CPO price (which is calculated using international and local CPO prices) drop below USD $750 per metric ton, the export tax is scrapped. In early September, Malaysia had already implemented a zero CPO export tax.

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Forecasts for crude palm oil (CPO) futures in 2015 are positive as prices are expected to rise on declining inventories in Malaysia, growing Indian CPO imports, and falling Indonesian CPO exports as domestic biodiesel demand rises in Southeast Asia’s largest economy. Malaysian palm oil futures rose to a four-month high at the start of the week (touching 2,345 ringgit per metric ton) partly due to sharp ringgit depreciation (which makes CPO relatively cheap for other currency-holders). However, today (06/11) futures fell 1.3 percent to 2,223 ringgit.

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Indonesian crude palm oil (CPO) producers have released good corporate earnings over the first nine months of 2014. Below, we have presented an overview of those CPO producers, listed on the Indonesia Stock Exchange, that have already released their financial results. Combined, these eleven companies recorded net profit growth of 155.3 percent year-on-year (y/y). The main reason for this improved performance was the 24 percent (average) increase in global CPO prices as the commodity gained popularity as an energy source.

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Exports of crude palm oil (CPO) and CPO derived products from Indonesia in the first nine months of 2014 only reached 15 million tons, down 1.75 percent from the same period last year. The main cause for this disappointing performance is slowing economic growth in China and India resulting in reduced palm oil demand from these two giant economies. As a result of weak global demand, the CPO price has fallen to an average price of USD $712 per ton in September 2014, down 5.4 percent from the previous month.

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Malaysia announced that it has extended its zero export tariff for crude palm oil (CPO) until the end of the year in an attempt to boost sales. Malaysian Plantation Industries and Commodities Minister Douglas Uggah Embas said that this decision is aimed at preventing a further drastic fall in CPO prices. Palm oil futures declined by about 18 percent in 2014 amid an oversupply in combination with weak global demand. Indonesia and Malaysia are the world’s top palm oil producers and exporters.

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Speculation emerged that Indonesia will scrap its export tariff for crude palm oil (CPO) in an attempt to boost sales. Three weeks ago, Malaysia had already scrapped the export tax for CPO for a period of two months to support exports and reverse a decline in CPO prices. Malaysian palm oil exports then immediately surged over 30 percent (month-to-month) in the first half of September, indicating the success of the export tax policy. Thus, the two countries - the world’s two largest producers and exporters of CPO - may become involved in a ‘tax war’.

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Indonesian stockpiles of crude palm oil (CPO) in August 2014 may have reached the highest level in 15 months on increased production and reduced global demand. According to data compiled by Bloomberg, CPO stockpiles in Indonesia surged 24 percent to 2.5 million metric tons in August (from 2.02 million metric tons in the previous month). Meanwhile, Indonesian CPO production grew 19 percent to 2.55 million metric tons, while CPO exports declined 2.2 percent to 1.8 million metric tons. Bloomberg used data from five planters and one refiner.

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The Agriculture Ministry of Indonesia expects that domestic production of palm oil in 2014 will decline 10 percent (roughly two million tons) from last year due to the possible impact of the El Niño weather cycle in the second half of this year. El Niño is a weather phenomenon that occurs once every 5 years on average and involves periodical warm ocean water temperatures off the western coast of South America. This can cause climatic changes across the Pacific Ocean, impacting on the global commodities market.

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Over the past couple of months we have informed on the shortage of cooking oil on the Indonesian market, the subsequent inflationary pressures this shortage caused, and the policies that were imposed by the government to tackle this shortage. But, we did not devote an entire article to this topic.

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Although there is plenty of opposition to – and criticism on – Indonesia for allowing crude palm oil (or CPO) to play a big role in the domestic economy (Indonesia being the world’s largest producer and exporter of CPO), the country is currently feeling the windfall from soaring CPO prices. And, it is contributing to Indonesia’s recovery from the severe – and still ongoing – novel coronavirus (COVID-19) crisis.

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Several negative sentiments are putting pressure on the crude palm oil (CPO) price in the first week of March 2018. These sentiments are expected to continue pushing downward pressure on the CPO price in the remainder of this week. On Monday (05/03) the CPO price on the Malaysia Derivatives Exchange (May 2018 shipments) fell 0.28 percent to 2,467 ringgit per metric ton. Compared to one week earlier, the price has now declined 2.91 percent.

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The crude palm oil (CPO) price is expected to strengthen in the first quarter of 2018 due to the impact of the La Nina weather phenomenon and rising CPO demand in the traditional big CPO importing countries. This is good news for stakeholders in the palm oil industry as the price has been sliding around 16 percent so far this year (toward the 2,700 Malaysian ringgit per ton level).

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Indonesia's largest supplier of crude palm oil (CPO), Astra Agro Lestari, is expected to see improving corporate earnings in the years ahead on the back of the rising CPO price and expectation of the company's climbing CPO production volume. The year 2016 was a good year for Astra Agro Lestari as it reported a 224.2 percent year-on-year (y/y) jump in net profit and a 7.6 percent (y/y) increase in sales, led by sales of CPO and derivative products. This was a great recovery from the preceding year. CPO and derivative products account for more than 86 percent of the company's total sales.

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The higher crude palm oil (CPO) price will have a positive impact on the corporate earnings of Indonesian CPO producers, including Sampoerna Agro. Benchmark palm oil futures for March 2017 delivery on the Bursa Malaysia Derivatives Exchange were at 3,161 ringgit (approx. USD $706) per ton at the end of last week, near a four and a half year high. However, not all analysts advise investors to purchase shares of Sampoerna Agro, a company that is listed on the Indonesia Stock Exchange.

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The crude palm oil (CPO) price touched its highest level so far this year. On Tuesday (20/09) palm oil futures (December delivery) - traded on the Kuala Lumpur exchange - ended the day at 2,690 ringgit (approx. USD $651 per metric ton). Palm oil prices are rising as CPO production in Indonesia and Malaysia will remain subdued this year due to droughts that were brought by the El Nino weather phenomenon earlier in 2016, while there is expectation of a rather wet season later this year due to the La Nina weather phenomenon.

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Indonesia's crude palm oil (CPO) exports rose 9 percent month-on-month (m/m) to 2.29 million tons in February 2016 on the back of growing CPO demand in Africa, Bangladesh, India and the European Union. Indonesia's February CPO export volume was better than estimated previously. Analysts had expected a figure below 2 million tons. Combined, Indonesia's palm oil exports reached 4.39 million tons in the first two months of 2016, up 22 percent (y/y) from the 3.59 million tons of CPO that Indonesia exported in the same period one year earlier.

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Crude palm oil (CPO) production in Indonesia and Malaysia is expected to decline due to the impact of the El Nino weather phenomenon (that brought a prolonged dry season to Southeast Asia). CPO production in Malaysia could fall between 1.5 and 2 million tons this year according to Dorab Mistry, Director at Godrej International. Declining output in the world's two leading palm oil producers and exporters implies that palm oil prices should be able to rise further. At the start of this week palm oil futures traded in Kuala Lumpur (June delivery) rose to 2,779 ringgit (approx. USD $695) per ton, the highest level since March 2014.

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Agribusiness company Astra Agro Lestari, one of Indonesia's leading crude palm oil (CPO) producers, is expected to show a better performance in 2016 on an expected rise in palm oil prices. Although palm oil futures currently feel the negative effects of tumbling global crude oil prices, these futures are estimated to have risen to about 2,700 ringgit per ton by May 2016 from around 2,385 (approx. USD $540)  per ton currently.

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