Soybean production, import taxes to affect CPO prices


The higher import tax imposed on crude and refined palm oil by India and soybean oil production are factors which can influence crude palm oil (CPO) prices in 2018.

Palm Oil Analytics owner and co-founder Dr Sathia Varqa said India’s import tax hike was the fourth in less than six months, and imposed to push up the prices of rapeseed to benefit Indian farmers.

“Although the impact is expected to be temporary, this (higher import tax) will make Malaysia’s key commodity export more expensive in the world’s second-most populous nation.

“I do not think they (India) will impose another import tariff in the near term (after this),” he said during his presentation on “Global Economics and Market Volatality — Impact on Commodities” at the Palm and Lauric Oils Price Outlook Conference & Exhibition 2018 (POC2018) in Kuala Lumpur yesterday.

Sathia said the price and demand of other vegetable oils, such as soybean oil, would also affect CPO prices.

“Argentina is currently facing its worst drought, hitting soybean production. The lower production will raise soybean oil prices, which in turn will help increase palm oil prices,” he added.

Sathia also expects CPO prices to reach RM2,600 per tonne based on the third month benchmark by June this year, with average trading between RM2,500 and RM2,600 per tonne, driven by tight supply.

“Palm oil futures on Bursa Malaysia Derivatives Exchange trading has stood at about RM2,500 per tonne since January 2018 until now,” he said.

The POC2018 is a leading international conference in the palm and lauric oils indust ry, which gathers stakeholders from the edible oils industry for networking, and the exchange of ideas, solutions and trends.

The three-day event from March 5 was organised by Bursa Malaysia Bhd and attracted 1,700 participants.