Jakarta, CNBC Indonesia – Crude palm oil price (crude palm oil/CPO) so far this week shot to the psychological level of 6,000, following the ongoing crisis in Ukraine which triggered a shortage of vegetable oil in the global market.
Futures contract price (futures) CPO for delivery in February 2022 on the Malaysian Derivatives Exchange jumped 2.86% to MYR 6,468/ton or 180 ringgit on Friday (16/1/2022). Throughout the week, the rally was recorded at 9.24% from last weekend’s closing level of MYR 5,921/ton.
In five trading days this week, the price of Indonesia and Malaysia’s mainstay commodity only corrected once, namely on Wednesday. Even then, it is quite thin, which is 0.68% to MYR 6,135/ton.
Thus, throughout the current year, the price of the most active CPO contract still shot up by 25.37% from the position at the end of last year of MYR 5,159/ton. Throughout this year, the highest record price of CPO was at MYR 7,074/ton which was printed on March 9, 2022.
The rally took place after truck drivers in Argentina held a demonstration following a spike in fuel prices. This is an additional negative sentiment for the vegetable oil market, which is already under pressure from the conflict between Russia and Ukraine.
Drivers of grain trucks have been on strike since Monday (11/4) and nearly stopped transporting soybeans and corn to the South American nation’s main grain port. Argentina is the largest exporter of soybean oil in the world.
“We have 450,000 tons that can’t enter the port, 50 ships queuing up, huge logistics costs, and Easter is coming. This will cause total paralysis of shipping and foreign exchange if it’s not completed before Monday.” CIARA-CEC’s Chief Exporter Gustavo Igigoras was quoted as saying by Reuters.
Soybean oil is commonly used as an alternative to palm oil and other vegetable oils, such as sunflower seed oil and rapeseed oil. However, sunflower seed oil production has stalled due to the war in Ukraine.
On the demand side, India’s palm oil imports jumped 18.7% (mom) in March, as traders turned to securing alternatives to sunflower oil which can no longer be bought from Ukraine due to the war.
Palm oil is affected by movements in related oil prices as they compete for a share in the global vegetable oil market.
CNBC INDONESIA RESEARCH TEAM
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