1. Palm Oil Market Outlook
GLOBOIL 2019
Dubai, 28th – 30th April 2019
Dr. Sathia Varqa
Palm Oil Analytics, Singapore

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4. Outline Main problem Key factors impacting palm market Jan to Apr 2019
Production outlook
Demand
Indonesia and Malaysia
Reference to India & biodiesel
Stocks
Consumption outlook
Laurics oil
Conclusion & price outlook

5. Main problems
Slow export growth
Soaring stocks, particularly in Malaysia
Bad trade policies around the world
Weighing down on global CPO prices

6. Main factors impacting palm in 2019
MACRO
SECTOR
TRADE POLICY
HIGH STOCKS
CURRENCY
DEMAND

7. Problem : CPO prices down

8. Lower prices & narrower difference
In a low price scenario, Malaysian and Indonesia government frequently tweak their taxes to influence prices in order to win market share

9. YoY Price change on major exchanges

10. Q Production up 15% from Q1 2018
Exports are up by 12% during the same time. Lag of million tons

11. Palm Oil Production

12. Export growth slowed down

13. 2019 production estimate & 2020 projection
Indonesia to make significant contribution to global CPO output in 2019 by 3 million tons to 44 million tons, but at a slower pace of growth of 7% versus 14% in 2018
Malaysia output seen rising 780,000 tons or 4% in 2019 from the previous year

14. Demand - Indonesia
Robust domestic demand from biodiesel segment helped to lower Indonesian stocks to 20 months low in February
Domestic consumption could overtake exports in about 5 years if biodiesel mandates are maintained

15. Demand – biodiesel outlook
Indonesia biodiesel segment to absorb 8-9 million tons of CPO in 2019

16. Demand – Indonesia biodiesel outlook
Indonesia biodiesel to see another year of increase in production (30%) and consumption (60%) in 2019 from the year before.

17. Demand - Malaysia
Exports rose mainly on support from zero export taxes and lower import tariffs from India. Malaysia export up 8% in Q1 2018
Though domestic biodiesel did not see a rise, Malaysia biodiesel export saw more than twofold rise in 2018 and in Q1 2019

18. Exception - Malaysia export to India
Malaysia RBD palm olein export to India been strong in Jan-Apr 2019 and is likely to continue into the rest of the year
Malaysia export to India make up 24% of the total exports in Q vs. Q

19. Malaysia export to India bonanza
Malaysia exports demand been particularly favourable to India due to:
Lower tariffs
Cheaper prices
Higher palm discount to SBO
Stronger Rupee
Declining edible oil stocks

20. Demand – higher palm discount

21. Demand – Indian Rupee rises
Rupee from worst to best performer making imports competitive

22. Demand - India edible oil stock
Stocks are just climbing up after staying in deficit in the last 5 months

23. Malaysia displaces Indonesia

24. Demand – biodiesel outlook
Malaysia biodiesel segment to absorb 1.50 million tons of CPO in 2019 versus 600K tons in 2018
Malaysia biodiesel exports could reach a record 700,000 tons in 2019 or 37% increase from 2018.
Q exports are up 79% from Q1 2018

25. Demand – stock levels YoY change
Indonesia - declining
Malaysia - surplus
China - rising

26. Consumption outlook

27. Laurics - cpko
Ample supply at origin market is likely to keep prices lower in 2019

28. Laurics – Ccno-cpko spread
CPKO Rotterdam traded at 10 year low of US$ 595 on spot delivery
CCNO-CPKO will widen to US$ 100 from current US$ 55

29. Conclusion & price outlook
Prices will stay under pressure RM 1990 (U$ 482) and upside of RM 2200 (US$ 533) in Q2 and Q3
Stocks must fall by 500K tons in Malaysia for prices to rise above RM 2300 (US$ 560)
Biodiesel will be the main price support this year. Indonesia B30 will be keenly watched. Malaysia biodiesel export looks strong again in 2019
CPO price difference - Indonesian & Malaysian price difference will stay narrow US$ 5-20
CPKO prices will be under pressure from high stocks & lower CCNO prices

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