• Normal in plantation cycle

On exports, Kenanga Research expected it to retreat slightly in December on seasonality factors.

“Traditionally, exports to China tended to decline in the month of December as it entered the winter season as CPO is prone to solidification in cold temperatures.

“Nevertheless, this should be cushioned by higher seasonal demand from the European Union (EU) and US.”

As such, the research arm forecasted December exports volume to inch down by 1.4 per cent m-o-m to 1.36 million MT.

Kenanga Research anticipated supply of 1.79 million MT to exceed demand of 1.66 million MT in December, leading to higher ending stocks of 3.14 million MT ( up 4.3 per cent m-o-m), marking the seventh consecutive monthly increase.

“In spite of that, we believe this will not weigh down CPO prices further given production has already begun to slow down and is anticipated to come off sharply in January.

“In addition, demand is likely to pick up in 1QCY19 on festivities such as Chinese New Year.

“As such, we expect CPO prices to recover to RM2,200 per MT to RM2,250 per MT level in January.”

Deputy Primary Industries Minister Datuk Seri Shamsul Iskandar Mohd Akin recently spoke to reporters on the sidelines of the National Seminar on Palm Oil Milling, Refining, Environment and Quality, describing the low CPO price situation as normal due to a plantation cycle.

According to Bernama, Shamsul Iskandar also said that the global output of edible oils in the last two years was on the rise following good weather, hence resulting in increased stocks.

“The price declined to as low as RM1,500 per tonne in November 2008 and it also dropped in 2009.

“But when this happens, we have to be in continuous engagement with stakeholders to ensure that even when the price is low, we will still strive to ensure the market responds positively.”

In other updates from Bernama, Prime Minister Tun Dr Mahathir Mohamad this week launched the B10 Biodiesel Programme that will see the fuel - comprising 10 per cent palm oil biodiesel and 90 per cent fossil diesel - used by all types of diesel vehicles in the transportation sector beginning February 1, 2019.

“The implementation of the B10 Programme is apt at this time in view of the lower price of palm oil biodiesel compared to petroleum diesel,” he said.

“I believe the B10 Programme for the transportation sector will run smoothly and will increase palm oil demand in the country from December 2018.”

He also urged vehicle manufacturers as well as original equipment manufacturers (OEM) to cooperate with the government in ensuring smooth implementation of the B10 Programme as well as any biodiesel programmes in the future.

According to Dr Mahathir, Malaysia needs to increase the fuel mixture in the future to strengthen domestic demand for palm oil.

“The use of palm oil biodiesel will have a positive impact on the palm oil industry by reducing palm oil stocks and stabilising palm oil prices.

“Through this effort, 650,000 palm oil smallholders will continue to enjoy more stable palm oil prices with increased revenue.”