KUCHING: The Malaysian palm oil industry has demonstrated resilience in the first half of this year with the benchmark crude palm oil (CPO) price remaining robust at RM3,900 per metric tonne average year-to-date.
Bursa Malaysia Berhad chairman Tan Sri Abdul Wahid Omar said this demonstrates the industry’s adeptness at navigating challenges, while maintaining its competitive edge, considering the influence of external factors on the world’s palm oil prices.
“Despite the looming El Nino phenomenon, which is expected to affect 2024 production, Malaysia’s estimated production of 19 million tonnes of palm oil in 2023 is said to surpass the 18.45 million tonnes recorded in 2022.
“This is further supported by the recent Malaysian Palm Oil Board (MPOB) report which highlighted a 15.55 per cent rise in exports and 11.21 per cent surge in production in July – surpassing market expectations.
“Meanwhile, palm oil stocks at the end of July 2023 reached approximately 1.73 million metric tonnes, marking a third consecutive monthly increase as reported by the MPOB,” he said.
He said this in his welcoming address at the East Malaysia Palm & Lauric Oils Price Outlook Conference and Exhibition (emPOC2023) here on Tuesday.
On the global front, he said, the United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2023 carries strategic significance.
“This move opens the door to immense potential by eliminating tariffs on Malaysian palm oil imports, allowing industry players to capitalise on opportunities arising from expanded market access and increased exports to the United Kingdom and fellow CPTPP member countries,” he said.
He added notwithstanding the prevailing optimism in the palm oil industry, market participants should remain vigilant in light of the increasingly unpredictable weather conditions, potential changes to global trade and Environmental, Social and Corporate Governance (ESG) policies, and ongoing geopolitical risks, all of which have the potential to significantly impact palm oil trade.
“Looking ahead, exchange-traded derivatives will continue to play a pivotal role by providing commodity producers and consumers with essential tools to manage price risk and protect portfolio values, especially during periods of market volatility.
“Particularly significant within sectors like agriculture, where prices are susceptible to swift fluctuations due to variables such as weather conditions and geopolitical events, derivative products enable producers to lock in future prices for their goods, ensuring revenue stability,” he said.
He added the well-established Crude Palm Oil Futures (FCPO) contract offered by Bursa Malaysia Derivatives plays a significant role in providing liquidity and transparency via an exchange-traded marketplace.
“FCPO offers standardised contracts and access to historical data, all of which contribute to supporting well-informed decision-making among market participants,” he said.
Abdul Wahid said being the global price benchmark for the crude palm oil market has resulted in Bursa Malaysia Derivatives’ notable performance, with a total of 19.1 million contracts traded across all products in 2022, marking a 3.8 per cent year-on-year increase.
“The trading volume of the global benchmark FCPO, on the other hand, reached an exceptional 16.2 million contracts during the same period, surpassing previous record highs.
“While these accolades affirm our position as a leading commodities marketplace in Asean, with ‘green offerings’, we remain dedicated to progress and pursue developments that open up more opportunities for investors and traders,” said Abdul Wahid.
