1. Palm Oil Market Review and Outlook 2020
GlobOil India, Mumbai, th of September 2019
Dr. Sathia Varqa
Palm Oil Analytics, Singapore

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4. Outline Main story Main factors impacting palm market Jan to Sept 2019
Production outlook
Demand
Indonesia and Malaysia
Reference to China, India & biodiesel
Stocks
Consumption outlook
Laurics oil
Conclusion & price outlook

5. Main story
Protectionist trade policies
African Swine Fever
Export growth accelerating
Production growth slowing
Jump in energy prices

6. SLOWER PRODUCTION RISE
Main factors impacting palm in 2019
MACRO
SECTOR
EXPORT GROWTH
TRADE POLICY
SLOWER PRODUCTION RISE
AFRICAN SWINE FEVER
ENERGY PRICES
RISING SBO – DCE & CBOT

7. CPO prices rising late in the year

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. Production : Jan-Aug 2019 vs. Jan-Aug 2018
Production up 14.36% from Jan-Aug 2019 vs. Jan-Aug 2018

11. Palm Oil Production

12. Hotspot Distribution
20th September 2019
1st September 2019
Potential loss of 1.20 to 1.50 million tons of CPO production from Indonesia
20th September 2019

13. Indonesia production to see a fall
-Western Kalimantan accounts for 29% of total oil palm planted area in Kalimantan.
-Kalimantan accounts for 36% of the total CPO production in Indonesia
-Worst affected dry weather in Western Kalimantan accounts for 7.22% or million tons of the national output
-South Sumatera accounts for 14% of the total oil palm planted area in Sumatera
-Sumatera accounts for 60% of the total CPO production in Indonesia
-Worst affected dry weather in South Sumatera accounts for 9% or million tons of the national annual output

14. 2019 production estimate & 2020 projection
Indonesia CPO output cut by 1.20 to 1.50 million tons in 2020 to 45 million tons due to losses from extreme dry weather conditions.
Malaysia output seen rising 780,000 tons or 4% in 2019 from the previous year but to rise at a slower pace in 2020.

15. Export growth Accelerating
Export is up 7.40% from Jan-Aug 2019 vs. Jan-Aug 2018

16. Demand - Malaysia
Overall exports rose mainly on support from zero export taxes and lower import tariffs from India & increased buying from China. Malaysia exports rose 19% Jan-Aug 2019, while domestic consumption was up 2.80%
Though domestic biodiesel did not see a rise, biodiesel exports saw a strong growth.

17. Demand – Malaysia biodiesel outlook
Malaysia is expected to export 700,000 tons of biodiesel in 2019 or 37% more versus Jan-Jul exports are at 367,000 tons.
Malaysia biodiesel exports on strong growth.
CPO-GO discount
E.U RED II
E.U anti-dumping duties on Indonesia

18. Malaysia RBD Palm Olein export to China
China is the main buyer of RBD palm olein in August
Edible oil deficit from lower soybean oil, lower crushing from poor soymeal sales and seasonal demand for mid-autumn festival

19. Malaysia export to India
Tariff reduction helped to increase million tons of Malaysia RBD palm olein to India from Jan-Aug 2019
Tariff reduction diminished Indian refining utilisation rate from 1.50 million tons in Q to 1.34 million in Q and lower to 1.07 million in Q2

20. Malaysia displaces Indonesia in Olein export

21. Demand - Indonesia
Robust domestic demand from biodiesel segment helped to lower Indonesian stocks to 21 months low in March
Domestic consumption could overtake exports in about 3-5 years if biodiesel mandates are maintained

22. Demand – Indonesia biodiesel outlook
Indonesia biodiesel to see another year of increase in production (30%) and consumption (65%) in 2019 from the year before.

23. Indonesia Biodiesel Capacity & Utilisation

24. Demand – stock levels YoY change

25. RBD palm olein export to India RBD palm olein export to China
4 main demand growth areas
Biodiesel exports
Biodiesel mandate
RBD palm olein export to India
RBD palm olein export to China

26. Consumption outlook

27. Laurics - cpko
Ample supply at origin market. Prices in correction mode now.

28. Laurics – Ccno-cpko spread
CPKO Rotterdam offers to trend below US$ 600 on spot delivery
CCNO-CPKO widened to over US$ 100 from the end of June

29. Conclusion & price outlook
BMD FCPO to trade RM (US$ ) in Oct & Nov but higher in Dec to RM 2200 (US$ 532)
First half of 2020 to see a rebound in prices to RM (US$ 560 – 580)
Indonesia CPO FOB to range US$ 530 – 550 in the first half of 2020
Biodiesel & RBD palm olein will be the main price support in 2019 & H Indonesia B30 will be keenly watched. Malaysia biodiesel export looks strong again in 2019
CPKO prices will be under pressure in Q4 after the recent rise due to persistent high stocks

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