InfoSAWIT, JAKARTA -The gap of consumption and production of vegetable oil in the world becomes the classical issue. The increasing consumption is always more than 10% in every single year while the production could be about 6% in every year. The gap of production and demand is the reason to make vegetable oil get more expensive.
The opposite condition may take place to the vegetable oil markets. It is always called as, one decade cycle. The vegetable oil could be over-production, hardly close to the demands in the year. Just like what has happened in 2018. The production of vegetable oil, and palm oil is over and this makes the price get cheaper.
For the stakeholders, the condition in 2018 could actually be anticipated in the previous days. But the traders and the big traders would get big losses because of the cheaper commodity. The facts showed, the cheaper commodity takes place in every day while the buying of crude palm oil (CPO) and its derivatives should follow the previous agreement.
As the result, they got double losses because of the gap of selling and buying price. For example, CPO today’s buying is US$ 600/ton but when selling it, it is US$ 580/ton. The gap is – US$ 20/ton and times the tonnage to be sold.
The massive losses of the big traders hit them and this makes them loss. As time goes, they get more losses. Imagine, if the gap of the losses – US$ 20/ton times 1.000.000 tons, the big traders may get losses up to US$ 20 million.
The CPO and its derivative export trade volume in one year could more than 25 million ton. The massive export volume, as a matter of fact, would influence the losses of the traders. The bigger trade they do, the bigger losses they get.
As part of the stakeholders, they certainly should minimize the losses for other stakeholders. The lowest parts of the stakeholders are the CPO producers or the palm oil plantation companies, up to the smallholders.
The cheaper CPO selling price is drastically and directly degraded to the fresh fruit bunch (FFB) selling price that the smallholders produce. As the result, theirs are cheaper and could not do anything. The helplessness of the smallholders would be the next issue for the government could not regulate and guarantee the minimal price of the smallholders’ FFB selling price.