Market players have been expecting the export ban to be lifted by the end of May. There are not enough storage tanks in Indonesia, especially as CPO production is expected to pick up during the peak production period in 2H22. — AFP photo
KUCHING: Indonesia its ban on palm oil export from today (May 23) onwards and analysts believe this could increase palm supply in Malaysia.
The research team at AmInvestment Bank Bhd (AmInvestment) noted the media reported that Indonesia will lift the export ban on crude and refined palm products from May 23 onwards. This is after considering improvements in local supply as well as the livelihood of 17 million workers in the industry.
“Apart from the lifting of Indonesia’s export ban, palm supply is expected to rise as foreign workers start arriving in Malaysia during the peak production period in the second half of 2022 (2H22),” it said.
Market players have been expecting the export ban to be lifted by the end of May. There are not enough storage tanks in Indonesia, especially as CPO production is expected to pick up during the peak production period in 2H22.
It also pointed out that recently, farmers and smallholders in Indonesia have been protesting against the export ban.
“Palm smallholders have been affected by the plunging prices of FFB in Indonesia amid poor demand. Palm oil millers in Indonesia have been reducing purchases of FFB due to the export ban.
“We understand that FFB prices have fallen by 40 to 60 per cent in Indonesia.
“We believe that CPO prices will weaken due to the increase in supply from the lifting of the export ban. Indonesian refiners and millers will be moving their crude and refined palm products from the storage tanks to be exported,” it said.
All in, AmInvestment maintained ‘underweight’ rating on the plantation sector.