PALMOILMAGAZINE, JAKARTA – The pricing of crude palm oil (CPO) is primarily driven by fundamental factors, with supply and demand being key determinants, in addition to the influence of factors like crude oil prices and the prices of other vegetable oils.
Geopolitical events can also have significant impacts, as was evident in 2022. The conflict between Russia and Ukraine, two major sunflower oil producers, played a pivotal role in this regard. These two countries collectively supplied 70% of the sunflower oil market in the European Union.
The war disrupted the supply of vegetable oil, causing a shortage for European consumers. Consequently, European nations, despite their efforts to promote alternative options in food and energy industries, were compelled to turn to palm oil once again due to the scarcity of other vegetable oils.
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Not only Europe, every vegetable oil consumer country got the impact. At the time, CPO got more expensive. In addition, Indonesia in March 2022 banned palm oil exports because of palm cooking oil supply issue in the domestic.
The peak was CPO once hit at RM 6.000 per ton. It was the most expensive one in the past decade. It made many vegetable oil consumer countries got pressed and Covid-19 pandemic was having no solution still.
Some countries, such as, India, Pakistan, and Bangladesh started decreasing CPO demands because of its price. They started multiplying supplies from soyoil though it was not too much expensive and it was cheaper than palm oil.
It is true that if the world has issue, palm oil would get blessing with its expense but other countries would get economic pressure. The question remains, what about palm oil price in the future?
Of course, there are many factors to consider until the late of this year to know price look in 2024. Analysis from PT Kharisma Pemasaran Bersama Nusantara (KPBN), by the III quarter of 2023, some factors would influence CPO price, such as, peak production in the United States of America (USA) that should plant soybean; the prediction of dry season. Then in the IV quarter of 2023, precisely in October 2023, it would be peak production of soybean in USA (soybean planting would be starting in South America).
From this condition, other vegetable oils just did revision, for instance, soyoil in USA, canola in Canada would be having decreasing production.
From the reasons, by the late of 2023 CPO could be at RM 3.800 to RM 4.200 per ton. Would the numbers remain high in the early of 2024 which is the political year in Indonesia?
