The ongoing trade conflict between the USA and China could turn out to be positive news to Indonesian and Malaysian crude palm oil (CPO) producers, an Indonesian analyst projects.
China has threatened to retaliate against US tariffs on Chinese steel and aluminium by setting its own duties on US agricultural imports, including soyabeans, which investment consultancy Danareksa Sekuritas analyst Yudha Gautama said could impact CPO products, Jakarta Post wrote on 9 April.
According to Gautama, the higher soyabean prices resulting from the duties could cause Chinese consumers to shift to CPO products.
In 2017, China took in 93.5M tonnes of soyabeans, equalling 64% of total global soya exports, while the USA was the largest soyabean producer in the same year with a total production of 116.9M tonnes.
US soya production was projected to increase to 119.5M tonnes in 2018.
Yosua Zisokhi, asset management analyst at PT Henan Putihrai, said CPO prices had already begun to strengthen.
“Plantation stock issuers would benefit in the short term with the increase in the average selling price of CPO,” he told Jakarta Post.
But Yosua said the higher CPO prices would be only temporary as the USA would quickly find alternative soyabean markets.