THE INVESTMENT APPROACH OF CALVIN TAN

BRENT CRUDE OIL NOW USD87.56 WILL BENEFIT PALM OIL THE MOST (NOT OGSE), Calvin Tan

calvintaneng
Publish date: Tue, 18 Jan 2022, 02:14 PM
Hi Guys,

I have An Investment Approach I which I would like to all.

Dear Investors,

 

Brent crude now USD87.56

Actual Chg %Chg
Crude Oil 85.1700  0.9 1.07%
Brent 87.5600  1.08 1.25%
Natural gas 4.2940  0.027 0.63%
Gasoline 2.4563  0.0248 1.02%
Heating Oil 2.6943  0.0267 1.00%
Actual Chg %Chg
Crude Oil 85.1700  0.9 1.07%
Brent 87.5600  1.08 1.25%
Natural gas 4.2940  0.027 0.63%
Gasoline 2.4563  0.0248 1.02%
Heating Oil 2.6943  0.0267 1.00%

Why it will benefit Palm Oil the most?

Answer:

Because Cpo is used in Biodisel & if Brent Oil is high there is more reason to use Biodisel which is made from Palm oil

See

 

The Influence of Crude Oil Price in Biodiesel and its Implication on the Production of Palm Oil: The Case of Indonesia

Wahyu Murti1

Abstract:

Over the last five years (2012-2016) there has been a rise in world oil prices which were very noticeable on an average of 17,85 percent per year. This increase encouraged the increased use of alternative fuels, one of which was biodiesel.

It was estimated that the average increase in global biodiesel production amounted to 43.18 percent per year. Because one of biodiesel feedstocks was CPO, the increased production of biodiesel causes CPO export demand to increase simultanesly. The Bio-diesel utilization is also expected to reduce oil consumption.

The purpose of this paper is to examine the influence of crude oil price increase on the Bio-diesel utilization, oil consumption reduction, and pollutant emission reduction.

Keywords: Crude Oil Price, Biodiesel, Palm oil

JEL Classification: F3, G15

1 Faculty of Economics, University Borobudur Jakarta, Indonesia, murti_why@yahoo.com

W. Murti

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1. Introduction

Nordin, Simeh, Shariff and Baharim (2007), proved in their studies that there is a relationship between the price of crude oil and biodiesel. The results showed that the increase in oil prices during the period of the last few years encouraged some countries to begin to pay attention to the use of alternative fuels, among others from the plant (biodiesel). The increase of petroleum will increase biodiesel production. Ramli, Abas, R. and Ayatollah (2007) in their studies proved that the crude oil price is affected by biodiesel, the first derivative product of palm oil which produces palm oil (known as crude palm oil or abbreviated with CPO), utilizing biodiesel which comes from palm oil, the results showed that the biodiesel increase has affected the crude palm oil price.

The development industries based on this CPO in addition directed to produce food products such as cooking oil, margarine, shortening, Cocoa Butter subtitute (CBS), and vegetable ghee, it is also directed to produce non-food products, such as industrial oleochemical primary (fatty acid, fatty alcohol, glycerin ) and other oleochemical derivatives, namely surfactants, cosmetics, farmacy, and bioenergy. Oil palm plantations and palm oil industry as a means to improve the socio-economic conditions of rural communities through the implementation of operations Inti-Plasma programs (Zen et al., 2006). When the world oil price increases, many countries use CPO as raw material of bio-diesel fuel as a substitute (Karuppuswamy, Sundararaj and Elangovan, 2007; Pociovalisteanu et al., 2010; Thalassinos and Politis, 2012; Thalassinos et al., 2012). These conditions favor the use of biodiesel as a variety of targets alternatives to fossil energy applied to several countries in the world (Kennerly and Neely, 2003).

In 2020, the European Union set a target of 10 percent biofuels of raw palm oil. Zen, Barlow and Gondowarsito (2006) studied that the crude oil prices have an influence on the palm oil as pointed out by Ahuja and Khamba (2008). It has been proved that there is an influence of biodiesel on the production of palm oil. The research result on the biodiesel and its impact on crude palm oil and its implications for palm oil, showed that the growing number of biodiesel has a positive and significant effect towards crude oil palm as well as the implications for the production of palm oil rises (Ashayeri, 2007). The increase of demand and the use of palm oil as a fuel is expected to cause disruption of the availability of CPO as raw materials for food, especially palm oil (Chand and Shirvani, 2000; Enkawa and Schvaneveldt, 2001). Novelty of this research is to add the existing variables into world oil price of the biodiesel and its impact on crude palm oil and its effect on oil palm.

2. Theory and Hypothesis

As Santoso (2014) has pointed out bio-diesel is a natural renewable energy source that made from biomass or vegetable oil. As the bio-diesel has physical properties very similar to petroleum derived diesel fuel or ADO (Automobile Diesel Oil), bio-

The Influence of Crude Oil Price in Biodiesel and its Implication on the Production of Palm

Oil: The Case of Indonesia

570

diesel has been used for motor engine since 1880’s. In 1920’s, bio-diesel production infrastructure has been nearly eliminated since diesel engine manufacturers altered their engine to utilize petroleum diesel that was much cheaper than Bio-diesel production. Recently, an increase on oil consumption, crude oil price, and ADO import have lead to consider bio-diesel utilization for transportation sector in Indonesia. An increase of the crude oil price that lead to a decreasing cost differential for bio-diesel production, bio-diesel utilization as alternative energy source in Indonesia is a real possibility. Some environmental impact concerns would also increase the bio-diesel utilization prospect.

Oil palm is a highly profitable crop adapted to the humid tropics and the area devoted to this crop is likely to expand significantly in the future. It has many environmentally favourable attributes over its full life cycle. When well managed it has a positive carbon balance and when grown in a landscape mosaic it can play a role in biodiversity conservation. It has driven rapid economic growth in several tropical developing countries and contributed to the alleviation of rural poverty. Abuses during periods of rapid estate expansion into areas of natural forest and onto the lands of poor rural communities have led to criticism by environmental and social activists. With good governance oil palm can make valuable contributions to development and the resulting prosperity may free people to invest (Sayer, 2012). The data shows that the demand for CPO as raw material MGS, margarine and shortening in Indonesia in 2004 amounted to 6.5 million tons increased to 10.6 million tons in 2010, or an average increase of 10.3 percent per year. While the CPO demand for non-food, especially for fatty acid, fatty alcohol, and glycerin in 2004 amounted to 114.8 thousand tons increased to 158 thousand tons in 2010. It showed that the average increase was 6.3 percent annually (Directorate General Agro and Chemical industry, 2004).

A researh conducted by Hartoyo (2011) has used an econometric model using simultaneous equations. An increase in world crude oil price of 0,192 percent caused the real export price of Indonesian palm oil to raise by 10,64 percent. Consequently, a larger biodiesel production is needed to meet their increase of world's consumer demand for bio-diesel. Also, with the increase in real export price of Indonesian palm oil, it will encourage palm oil producers to push their export volume. Indonesian palm oil exporter expected to increase by 6,37 percent to finally push the domestic CPO price increase by 1,85 percent. The rising of domestic oil prices are causing oil demand in the palm oil industry to decline by 0,49 percent and in the end resulting in the decline of palm oil production by 1,56 percent. The existing data indicate that the current national solar requirement amounted to 27 billion liters per year. It is meant that CPO could substitute 10 percent of the national diesel fuel requirements (Asian Development Bank and the Ministry of Industry, 2003). Ten (10) percent of the diesel fuel substitution has implications for the availability of palm oil as a raw material of food. With the increasing need for diesel fuel as a raw material to fuel, the demand for CPO as the raw material for fuel allegedly will continue to increase. Hameed and Arshad (2009) in their research showed that in the

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long term there is a directional relationship between the crude oil prices to the demand of oil from four plants, namely palm oil, rap seed, soybean, and sunflower. The fuel prices which continue to rise will increase the demand for biofuels such as bio-diesel. Currently, Indonesia was the biggest oil palm producer in the world with more than 50% of the market.

Table 1. Breakdown of global palm oil production

Palm oil itself is a commodity product in Indonesia which during 2002-2013, overtook oil as the main stay with an average growth of 13.4% per year. The largest increase was in 2001 and 2002, which is also called the palm booming due to an increase of 42% per year. Indonesia has a big contribution in control of oil palm price in the world (Figure 1).

Figure 1. Oil Palm Production

3. Oil Palm Condition in Indonesia

Sumber: Indexmundi 2014 (diolah)

 

Why Not OGSE?

Answer:

Because Petronas has allocated 9% Capex for Renewable Energy like Hydro, Solar & Biodisel for year 2,022 to avoid pollution due to climate change

 

Best Regards

Calvin Tan

 

Please buy or sell after doing your own diligence or consult your remisier/fund manager

 

 

Discussions
Be the first to like this. Showing 21 of 21 comments

gladiator

BRENT CRUDE OIL NOW USD87.56?? I was lucky to not just hold palm oil shares but also diversify into steel and oil & gas counters.

2022-01-18 16:41

ITreeinvestor

why not just direct buy oil stock like armada?

2022-01-18 19:58

calvintaneng

Armada is better than Bloated Tech Bubble going to burst & implode
Also better than Banks which are fully of hidden Debt bombs (Non payment from SME lands & properties in default) swept under the carpet

But Armada itself is in danger later as World turning from Fossil fuel to Renewable Energy

A more permanent investment is still palm oil due to 2 Lasting factors

1) Palm oil is used as Food found in 50% of all supermarket products
See
https://goldenagri.com.sg/supermarket/
This is recession proof

2) Palm oil is also a clean green energy used as Biodisel

2022-01-18 20:05

calvintaneng

PALM OIL AT WORLD RECORD!!!

https://tradingeconomics.com/commodity/palm-oil

2022-01-18 23:12

calvintaneng

Steel chart down a lot

https://tradingeconomics.com/commodity/steel

2022-01-18 23:13

OTB

According to historical records, if the Brent crude oil price is high, all metal commodity prices will be high too.
A high Brent crude oil price will benefit all steel stocks.

Metal commodity price follows the same trend as the Brent crude oil price trend.

Mr Market will tell us the truth.
Thank you.

2022-01-18 23:24

calvintaneng

Canola oil at 50% Highest World Record over Usd950 above last world record of Usd600

https://tradingeconomics.com/commodity/canola

As long as Canola oil does not fall back to Usd600 Palm oil will

GO INTO SUPER BULL OF SUPER BULL!!

2022-01-18 23:30

calvintaneng

Brent jumped up to Usd88.47

Nasdaq down 2.6%

Palm oil will go up more

Already warn all to sell high flying Tech stocks with high P/E and hide in the safety of low P/E palm oil

2022-01-19 06:18

Johnzhang

oil and coal price spike will lead the broader commodities market higher including CPO and metals. The supply chain hiccup, tight energy supply, tight labor problem , China's decarbonising, wild weather, pandemic lockdown, lack of new downstream investment (particularly in O&G and cpo sectors), etc ,will continue to benefit the commodities in 2022.

2022-01-19 06:53

calvintaneng

Commodities super trend might last up to 7 years or even longer due to the added impetus of climate change

Prepare for a long boom in commodities

For far too long the world has ignored basic agriculture

Now the years of neglect will result in high food prices in particular

2022-01-19 07:02

calvintaneng

Last month palm oil got 2 engines of growth

1. Very high canola oil (Above Usd950) was Usd600 and very high soyoil (Usd59) was Usd30 propelled Up from Rm2500 to Rm5,100 per ton

2. Joe Biden election mandate. Turn fossil refinery to Biodisel refinery in USA

Now got 2 more Catalysts

3. High Brent crude at Usd88.8 spurs use of biodisel alternative

4. Indonesia might limit export of raw palm oil and go downstream manufacturing of finished products like soap, milk creamer , biodisel , bioplastic made from palm oil

Also limit export of cooking oil as prices soared

With 4 engines all firing Palm oil will go into a powerful bull run earnings and then bull run in stock prices in coming months

2022-01-19 07:35

calvintaneng

As long as Canola oil does not fall back to USD 600 from Usd1,000

Cpo probably will not fall below Rm4000

And Thplant already stated their cost of Cpo production at Rm1,465 will even make money if Cpo at Rm2,500 a ton

Kmloong happy if Cpo at Rm3,000 a ton

Simedarby plant said first qtr of 2022 Cpo will maintain above Rm4200 a ton due to demand more than supply

The palm oil company bosses are sanguine while out naysayers talk down

Who do we chose to believe ?

Of course we believe the Insider bosses with long years in palm oil business and not the arm chair critics with not one day of real business experience at all

2022-01-19 07:46

calvintaneng

Brent oil now at above Usd88 still very far from its high of Usd140 in year 2007/8
https://tradingeconomics.com/commodity/brent-crude-oil
Click on 25 year button to view full history

Palm oil rally has surged to World record over Rm5,100

https://tradingeconomics.com/commodity/palm-oil
Click on 25 yr button to view full chart

2022-01-19 13:12

calvintaneng

Fantastic news

Soyoil has crossed Usd60 (was below Usd30)

We can look forward to Cpo breaching next world record of RmR5,500 a ton

2022-01-20 08:46

calvintaneng

On Friday Fcpo 2022 closed at new record of Rm5,504 per Metric Ton for the very first time

2022-01-24 08:41

Intrinsic99

Post removed.Why?

2022-01-26 08:19

Intrinsic99

liar always liar, behave like good man to promote and cheat people everywhere

2022-01-26 08:20

calvintaneng

I am telling the truth

Truth will prevail

Very soon will come Feb 2022

All will see for themselves palmoil companies results one by one out

Then the real liar will be found out

2022-01-26 08:21

Intrinsic99

If you so confidence what you invested, no need to good every forum keep on asking people sell other stocks to support what you invested.

Behave like scammer, always sweet talk how good what you invested, how profit can make what you invested.

We already knew you for the past 1 year, behave same matter to con everywhere, very soon we will hear this liar say, "oh, I already sold this palm oil stock to swift to other more profit can make"

Liar always liar, never change behaviour

2022-01-26 08:30

calvintaneng

The truth is this

You have a warped mind beclouded with prejudice

Better go see a doctor

2022-01-26 09:50

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