Medan  – The price of crude palm oil (CPO) is predicted to continue in the high level at least until March 2022, as demand for the vegetable oil is rising at the international market.

“On 18 January 2022, the price of CPO had reached Rp14,805 per kg, which is the highest so far until mid-January 2022,” the Indonesian Palm Oil Association’s (GAPKI) North Sumatera Office Executive Secretary Darma Sucipto said in Medan on Tuesday, 18 January 2022.

The average price of CPO in 2021 was Rp11,753 per kg with the highest level reaching on 03 November at Rp14,893 per kg. The CPO price increase was driven by the continually rising demand at domestic and foreign markets.

He said that the demand at domestic market was lifted by the mandatory program of biodiesel 30 percent (B30) which has been steadily growing. The demand at global market is driven by the growth of downstream palm oil industries in a number of countries.

“The increase of CPO price is pushed by the fear of supply shortage from producing countries, especially Indonesia as the world’s largest producer. Fearing the possibility of CPO supply shortage has made the importers in the consuming countries to buy more CPO, sending prices higher,” he said.

The CPO price increase was also caused by low production as a result of various factors. “The faster and higher growth of demand than the production has pushed up the price increase,” he added.

The demand from the foreign market is predicted to get even higher as India has planned to reduce the import tax of CPO and the Indonesian plan to implement the mandatory program of biodiesel 40 percent (B40).

Darma Sucipto noted that the price increase of CPO since 2020 until early 2022 has become a historical moment in the commodity trading. “Usually, surging prices only last for 3 – 6 months,” he said.

Source: Antaranews.com