Jakarta, CNBC Indonesia – Rising prices crude palm oil (CPO) happened since last March. The ongoing rally has made CPO prices now in their highest range in 8 years. This makes the national oil palm plantation sector earn rating overweight (increase over other sectors) from analysts.
The CPO futures contract price for January delivery on the Malaysia Derivative Exchange has touched the level of RM 3,300 / ton until this November. Meanwhile, the price of CPO FOB Indonesia in Kalimantan as of September has reached over Rp. 9,000 / Kg.
In a press release The Indonesian Palm Oil Entrepreneurs Association (GAPKI) on Thursday (12/11/2020), nThe export value of palm oil products during January-September 2020 reached US $ 15.49 billion, up 7.19% from US $ 14.46 billion in the same period last year.
CPO exports until September reached 5.35 million tons or around 15.5% of CPO production. In July, CPO exports amounted to 656,000 tons, then in August it decreased to 510,000 tons, and in September it edged up to 518,000 tons.
The highest number of exports during the nine months period this year occurred in January 2020 which reached 699,000 tons and the lowest was in August 2020. The increase in exports was supported by increased demand from China, India and other countries such as Russia and Brazil.
Meanwhile, Indonesia’s CPO production during January-September 2020 reached 34.4 million tons, or decreased by around 4.7% compared to the same period last year. The decline in Indonesian palm oil production was caused by the long drought that occurred last year.
Low CPO prices also make fertilizer use lower and result in decreased production. The significant increase in CPO prices starting in October was triggered by La Nina sentiment.
La Nina is basically a natural phenomenon characterized by a higher rainfall intensity. It can even be 40% higher than normal. The Meteorology, Climatology and Geophysics Agency (BMKG) has warned that from October to the end of the year heavy rains will hit all parts of the country.
If you look at the La Nina incident that occurred in 2011-2012 and 2016, the impact on CPO prices tends to be positive. The increase in CPO prices is seen as a positive sentiment for palm oil issuers in the country.
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