MPIC EXPECTS CPO PRICE TO TREND DOWNWARD ON BEARISH MARKET SENTIMENT

KUALA LUMPUR, Nov 23 -- The Ministry of Plantation Industries and Commodities (MPIC) expects crude palm oil (CPO) price to trend downwards as more producing countries are able to harvest the fruits, its secretary-general, Datuk Ravi Muthayah said. 

He said with export opening up the markets, MPIC believes prices will soften a bit and this may also lead to a bearish market sentiment.

“The recent crude palm oil price rally since June 2020 was driven by supply disruptions in key edible oils, as well as the palm oil producing regions, and crude palm oil has traded about US$1,230 per tonne. 

“As we have seen on Oct 15, this is also a historic price in the palm oil industry,” he said in his opening remarks at the virtual forum on “Outlook for Challenges and Opportunities for Palm Oil Producers” (OCOPOP) today. 

Ravi hopes producing countries, including Malaysia, take appropriate measures to ensure a fair price, as well as be prepared to face any kind of challenges, especially from the market which has a negative sentiment on palm oil.

“The series of negative narratives towards palm oil is a never ending issue, we have seen it started with reports claiming palm oil is filled with saturated fat contributing to coronary heart disease.

“Later, we see that the renewable energy directive too has categorised palm oil as indirect land use change (ILUC) and will phase out palm oil-based biofuel gradually in 2030,” he said. 

He said recently palm oil was the only target for high ILUC and as soybean oil had been taken out of the list, many countries, especially European Union (EU) member states have begun to transpose the European Union Renewable Energy Directive II (EU RED II) into their local law which indirectly banned or rather put palm oil-based biodiesel at a disadvantage position. 

Moreover, he said palm oil has often been linked to food safety and health issues such as containing high 3-monochloropropane diol (3-MCPD) and recently mineral hydrocarbon oil presence in some of products.

“These are some of the challenges posed by the industry and it is imperative for us to counter narrate the claims with evidence-based facts to ensure a more sustainable industry,” he said.  

On the OCOPOP, which is organised by the Council of Palm Oil Producing Countries (CPOPC), he said the objectives of the webinar is to provide a platform for interaction and discussion for all stakeholders, especially on three key aspects of the palm oil industry in relation to supply, demand, as well as price in the global market.

“There is a need to develop a balanced supply and demand strategy to ensure that the market price remains remunerative for the industry, so that it provides sustainable livelihood for the smallholders as well. 

“The discussion on formulating strategies for sustainable supply, demand and remunerative prices of palm oil will focus on concerns faced by producers. Hopefully, this will find ways to improve collaborations to mitigate threats, challenges and to develop opportunities for palm oil producers,” he added.

Meanwhile, Dr Musdhalifah Machmud, Indonesian Deputy Minister for Food and Agribusiness at the Coordinating Ministry for Economic Affairs, said Indonesia has designed a downstreams palm oil industry development roadmap to increase productivity and support the industry activities, create ecosystem, implement good governance, improve capacity building, and develop technology to boost palm oil business.  

“Not only about demand and supply issue but also a greater control of the whole supply chains of the industry -- for that to happen in the republic, it must create a conducive ecosystem including more investment in downstream industries,” she said. 

Her opening remarks was read by Moch Edy Yusuf, Indonesian Assistant to Deputy Minister for Estate Crops, Agribusiness Development of the Coordinating Ministry for Economic Affairs

-- BERNAMA