Bakke: CPO price expected at RM2,250-RM2,500

Executive chairman/managing director Tan Sri Mohd Bakke Salleh(filepic) said CPO prices hit the floor price of RM2,100 per tonne in July.

PETALING JAYA: Sime Darby Plantation Bhd expects crude palm oil (CPO) prices to range between RM2,250 and RM2,500 per tonne in the second half of 2018.

Executive chairman/managing director Tan Sri Mohd Bakke Salleh said CPO prices hit the floor price of RM2,100 per tonne in July.

“As such, this can only mean that prices have bottomed out and are poised for a recovery. One factor to drive prices higher is Indonesia’s B20 mandate starting September.

“We hope to see an increased utilisation of biodiesel to four million tonnes this year from 2.5 million tonnes last year,” he told reporters after announcing the company’s performance for the financial year ended June 30, 2018 here yesterday.

Mohd Bakke, who is also Malaysian Palm Oil Board chairman, said overall sentiment towards the commodity had also improved given the uptrend in crude oil prices.

Meanwhile, he anticipates demand from China to improve as a result of Sime Darby Plantation’s memorandum of understanding (MoU) with Cofco Group Co Ltd in China to increase the trade volume of palm products.

Commenting on demand from India, chief operation officer (downstream) Mohd Haris Mohd Arshad said CPO is facing intense competition against other edible oils there, but, the current low price could potentially provide an incentive for manufacturers to opt for it.

On CPO production, chief operation officer (upstream) Mohamad Helmy Othman Basha said there had been a drop in production when compared to July against the same month of 2017, which seems to be the case with other plantation companies in Malaysia.

“In total, there could potentially be a drop in CPO production for Malaysia this year compared with 19.92 million tonnes recorded last year.

“However, the story for Indonesia is different because companies there are still experiencing high production on a daily basis,” he added.

For the 2018 financial year, Sime Darby Plantation recorded a net profit of RM1.73bil compared with RM3.51bil in the 2017 financial year, while revenue was at RM14.37bil from RM14.78bil. — Bernama