PUTRAJAYA: Primary Industries Minister Teresa Kok expressed optimism on crude palm oil (CPO) prices and exports of palm oil to China, saying that the setback of China’s novel coronavirus is temporary.
Given that CPO prices headed south since last week, Kok said Malaysia’s economy would overcome the negative impact of palm oil prices from the coronavirus similar to the outbreak of severe acute respiratory syndrome (SARS) in 2002.
“This is a temporary phenomenon. Because of the coronavirus outbreak, there will be months where everyone would be suffering but the setback of the virus will be over just like SARS.
“Right now, the coronavirus will affect Malaysia and the world economy for the next few months but Malaysia will overcome it, ” Kok told reporters on the sidelines of the Reach & Remind, Friends of the Industry Seminar and Dialogue organised by the Malaysian Palm Oil Council (MPOC).
Yesterday, palm oil futures rose for the second day on global market recovery as firmer petroleum prices and weaker ringgit prompted investors to increase their purchases.
The benchmark third-month CPO futures for April was traded RM38 higher at RM2,651 per tonne as at 5pm yesterday.
Last week, CPO prices on Bursa Derivatives Exchange posted their biggest single-day drop of 10% since 2008 from the ongoing concerns that coronavirus will reduce demand from China, the world’s second biggest importer.
Meanwhile, MPOC in a statement cited Kok as saying that the high CPO price is expected to continue with the implementation of the B20 biodiesel mandate, which is expected to take place this month, as well as other factors including lower CPO stocks and a decrease in production.
She said the current setback with India’s move to cut back on palm oil purchases is also temporary.
“Having long-standing bilateral ties, the two nations will overcome the current challenges and prevail towards mutual and beneficial outcomes, ” Kok said.
Prime Minister Tun Dr Mahathir Mohamad announced yesterday that Pakistan is ready to import more palm oil from Malaysia.
Currently, Malaysia is seeking other markets following controls imposed by India on refined palm oil imports.
In 2019, Pakistan bought 1.1 million tonnes of palm oil from Malaysia.
For this year, Primary Industries Ministry secretary-general Ravi Muthayah reiterated that industry experts expected CPO prices to average around RM2,700 per tonne – higher than last year – despite the outbreak of the coronavirus.
On the exports front, Malaysian Palm Oil Board director-general Dr Ahmad Parveez Gulam Kadir expects the exports of palm oil products to China to be similar to last year following the outbreak of coronavirus.
Malaysia’s palm oil exports to China jumped 33.9% in 2019 to 2.49 million tonnes from 1.86 million tonnes in 2018.
Ahmad believes that China’s demand for instant noodles, which utilises palm oil, would increase as people would prefer to stay at home due to the coronavirus outbreak.
“This will benefit palm oil consumption. Even though the virus may affect palm oil consumption in other sectors, it will be compensated by packaging and instant noodle industries.”
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