JAKARTA – The price of crude palm oil (CPO) has been continually rising and reached the highest price record. The CPO price increase was driven by the decrease of CPO production in Indonesia and Malaysia as a result of the public and economic activity restrictions (PPKM).

Based on Bloomberg report on Tuesday, 28 July 2021, the price of CPO for October 2021 delivery in Malaysia Derivates Exchange tumbled by 1.88% to RM 4,331 per ton. The CPO price decreased after reaching the highest price record at RM4,422 per ton at the previous day.

TRFX Garuda Berjangka Director Ibrahim Assuabi said that the public and economic activity restrictions in Indonesia and Malaysia after seeing surging cases of Covid-19 had caused a decrease of CPO production. But the global demand for CPO has been steadily climbing that has led to the constant rise of the CPO price.

“The social and economic activity restrictions in Indonesia and Malaysia had led to the decrease of CPO production, while global demand for CPO is still high,” he said.

Reuters also reported that the demand for CPO is still high. It indicated by the exports of Malaysia during the first semester 2021 that surged by 3.8% to 682,426 tons.

Ibrahim said that the lockdown had forced the public to do their regular activities from home, but increased their demand for palm oil products.

He said that CPO supply at global market also tended to decrease, as Indonesia needed more CPO to produce biodiesel 30% (B30). “The need for B30 production in Indonesia could reach up to 30%  of the global CPO supply. As a result, Indonesia’s CPO export dropped,” said Ibrahim.

If the Covid-19 pandemic continues rising and Indonesia and Malaysia maintain the public and economic restrictions, Ibrahim predicted that the price of CPO is potential to reach up to RM5,000 per ton.

He also projected that the CPO price will decrease if Indonesia and Malaysia return to their normal public and economic activities. (*)

Source: KONTAN.CO.ID