Palm Oil Illustration (Photo: Pixabay)

JAKARTA (TheInsideStories) – Indonesian government set a reference price for crude palm oil (CPO) products for August delivery  US$532.30 per metric ton (MT), the trade ministry reported on Tuesday (07/30). The reference price weakened by 1.87 percent from July of $542.45/MT.

“At present CPO reference price remains below the level of $750/MT. For this reason, the government imposes a CPO export levy zero for the period of August 2019,” said Director General of Foreign Trade of Trade Ministry, Oke Nurwan in an official statement.

While, the reference price of cocoa beans in August $2,469.64/MT, or up 0.59 percent from the previous month, which was $2,454.93 a MT. He added, the cocoa beans price has an impact on increasing export reference price in August 2019 to $2,183/MT, up 0.64 percent from the previous period which was $2,169/MT.

Increased reference prices and benchmark prices Cocoa bean exports are due to stronger international prices. But, Nurwan assured that the rising price did not have an impact on the external duty of cocoa beans which remained at 5 percent.

Then levy tax for wood and leather products there was no change from the previous month period.

Leading industry analyst Thomas Mielke from Oil World said on Tuesday, that palm oil prices are likely to recover in the second half (2H) of 2019, helped by a slowdown in production growth and rising demand from the biodiesel industry. Earlier this month, benchmark palm oil prices have shed almost 3 percent to a near four-year low at 1,916 ringgit.

“The combination will keep palm oil prices higher for the rest of this year and in 2020,” he said.

He predicted Indonesia’ consumption of palm oil for biodiesel will rise by more than 3 million tons (MT) in 2019, taking total consumption to 14.8 MT of CPO, he said. The government planned to increase the mandatory level of bio-content in biodiesel next year to 30 percent he estimated will rise Indonesia’ production by 5.3 percent to 43.7 MT.

Mielke also rated, the decline in soybean crushing in China following a trade war with the United States could lift the country’ palm oil imports by 18.5 percent to 6.4 MT until end of September. He also pegged Malaysian palm oil output at 20.3 MT in this year, up 4.1 from a year ago. 

Furthermore he opined, soybean production in India could fall 6.6 percent to 9.8 MT until 2020, as low rainfall hit the oilseed growing region in central India.

Written By Willy Matrona