What is CIF Rotterdam?
CIF Rotterdam is one of the international price references for crude palm oil (CPO) and its derivative products most widely used in global trade. This price reflects the value of the commodity delivered up to its arrival at the Port of Rotterdam in the Netherlands, which is one of the largest vegetable oil distribution hubs in Europe.
Because Rotterdam is the main gateway for vegetable oil trade in the European Union region, the CIF Rotterdam price is often used as a benchmark for world CPO prices, particularly for export transactions to the European market.
Understanding CIF Rotterdam
The term CIF stands for Cost, Insurance, and Freight, one of the international trade terms (Incoterms) indicating that the agreed price already covers:
- The cost of the goods (cost);
- The insurance premium (insurance);
- The sea freight (freight) up to the port of destination.
In the context of palm oil trade, the CIF Rotterdam price reflects the value of CPO or its derivative products that have been delivered to the Port of Rotterdam.
Unlike the FOB (Free on Board) price, which only covers the value of the goods up to their loading onto the ship at the port of origin, the CIF price already includes shipping costs and insurance protection during the journey.
The Function of the CIF Rotterdam Price in Palm Oil Trade
The CIF Rotterdam price plays an important role as an international market reference because it is used by industry players, commodity traders, analysts, and financial institutions to monitor global palm oil price movements.
Some of the main functions of CIF Rotterdam include:
- Serving as the price reference for palm oil exports to Europe;
- Being used as a benchmark in international trade contracts;
- Serving as an indicator of palm oil demand and supply in the global market;
- Helping industry players carry out hedging and market analysis.
CIF Rotterdam Price Assessments
A number of commodity price data providers routinely publish CIF Rotterdam price assessments.
S&P Global Platts
S&P Global Platts began publishing daily assessments of Crude Palm Oil (CPO) and Crude Palm Kernel Oil (CPKO) CIF Rotterdam on 1 November 2019. The quality specifications used refer to the general Indonesian and Malaysian standards, namely a maximum Free Fatty Acid (FFA) content of 5% and a maximum Moisture and Impurities (M&I) content of 0.50%.
Fastmarkets
Fastmarkets provides daily spot price assessments and forward curves for CPO and CPKO CIF Rotterdam. In addition, Fastmarkets also publishes FOB Indonesia, FOB Malaysia, and CFR India price references as comparisons in international palm oil trade analysis.
FOSFA International
FOSFA International uses CIF Rotterdam as the basis for determining settlement prices for bulk crude palm oil contracts. These settlement prices are determined based on the CIF market value of the commodity arriving in Rotterdam and are published periodically every Monday and Thursday.
Relevance of CIF Rotterdam to the Indonesian Palm Oil Industry
As the world’s largest palm oil producer, Indonesia is closely linked to CIF Rotterdam price movements. Together with Malaysia, Indonesia supplies about 90% of the world’s palm oil needs, while the European Union is one of the main export markets for global palm oil.
Changes in the CIF Rotterdam price can affect:
- International CPO reference prices;
- Global palm oil trade sentiment;
- The value of Indonesian palm oil exports;
- The government’s determination of reference prices for CPO export duties and levies.
Therefore, the CIF Rotterdam price is one of the indicators widely monitored by palm oil industry players, exporters, commodity traders, and policymakers.
References
S&P Global Platts, “Platts to launch CIF Rotterdam Crude Palm Oil, Crude Palm Kernel Oil assessments”, https://www.spglobal.com/energy/en/pricing-benchmarks/our-methodology/subscriber-notes/100319-platts-to-launch-cif-rotterdam-crude-palm-oil-crude-palm-kernel-oil-assessments
Fastmarkets (Palm Oil Analytics), “Crude Palm Oil CIF Rotterdam”, https://www.palmoilanalytics.com/price/crude-palm-oil-cif-rotterdam/
FOSFA International, “Settlement Prices | Oils | Seeds | Fats”, https://www.fosfa.org/contracts/settlement-prices/