- Yesterday, Tan Sri Yusof Basiron predicted that CPO prices would trade between RM2,600/tonne and RM3,000/tonne in 2014F.

- He also defended the palm oil industry in Malaysia against the deforestation policy of some companies. He said that oil palm only accounts for 0.31% of the world’s agricultural areas of 5bil ha. Also, Sarawak removes more carbon dioxide than it emits.

- However, Mr Dorab Mistry said that consumer companies in the world are under pressure from environmental organisations to buy traceable and sustainable palm oil. In the West, there is a stigma that palm oil is environmentally unfriendly.

- Mr Dorab Mistry also said that in the Western countries, national certification standards such as MSPO (Malaysia Sustainable Palm Oil) and ISPO (Indonesia Sustainable Palm Oil) might not carry as much weight as RSPO (Roundtable for Sustainable Palm Oil).

- RSPO is gaining worldwide acceptance. For national standards to be successful, they will have to go beyond RSPO requirements. According to Tan Sri Yusof Basiron, MSPO might only be rolled-out in 2015F. The standards are currently being drafted by SIRIM.

- Mr Dorab Mistry said that CPO prices would have crashed last year if it were not for Indonesia’s biodiesel policy. Although Indonesia’s B10 biodiesel policy might not be fully implemented this year due to logistics issue and the lack of response to Pertamina’s tender, the initial implementation of the policy has helped support CPO prices.

- Apart from being the world’s largest producer of palm oil, Indonesia might also turn out to be one of the largest consumers of palm oil due to the biodiesel policy.

- Mr Fadhil Hasan from Indonesia said that palm oil exports from Indonesia would remain flat YoY at 19.7mil tonnes in 2014F.

- He does not expect an uptick in demand from China and Europe as buyers are likely to switch to soybean. Hence, the bulk of palm oil would be used domestically.

- Domestic consumption of palm oil in Indonesia is forecasted at 10.5mil to 11mil tonnes this year. CPO production is estimated at 28.5mil to 30mil tonnes.

- Mr Fadhil Hasan forecasts CPO prices to trade between US$925/tonne (RM3,053/tonne) to US$975/tonne (RM3,218/tonne) this year. 

Source: AmeSecurities