KUALA LUMPUR: Crude palm oil (CPO) price surged to its highest level in nearly three years at RM3,025 per tonne on December 31 last year, the Malaysian Palm Oil Board (MPOB) said.
Previously, CPO’s highest level was recorded at RM3,060 per tonne on February 22, 2017.
MPOB said the lowest price recorded was at RM1,834 per tonne on March 18 last year.
The average price of palm kernel (PK) also increased to RM2,187.50 per tonne on January this year from its lowest point of RM1,050.00 per tonne recorded on June 19 last year.
Efforts to boost the local palm oil market and the decline in stocks had contributed to the rise in CPO prices, MPOB said in a statement last Friday.
The board was responding to former prime minister Datuk Seri Najib Razak’s Facebook posting, comparing the current performance of the oil industry with the price of CPO.
MPOB said the government haf embarked on various strategies to strengthen the palm oil price and reduce the financial burden of over 500,000 local smallholders.
“The increase in prices of CPO and PK in the market contributed to the increase in the price of fresh fruit bunches, for Grade A, increasing to RM659 per tonne on January 10, 2020.”
Among the factors that influenced the increase were higher exports of palm oil products, lower CPO inventory, lower palm oil stock, decrease in palm oil production and higher palm oil-blend biodiesel mandate from Malaysia and Indonesia this year.
Aggressive promotional campaign by Primary Industries Ministry and its agencies including MPOB and Malaysian Palm Oil Council has boosted the exports of Malaysian palm oil products.
“Exports of palm oil products increased 2.99 million tonnes or 12.0 per cent to 27.86 million tonnes in 2019 from 24.88 million tonnes in 2018,” MPOB said.
Malaysia's total palm oil exports to the world market increased 12.0 per cent or 1.98 million tonnes last year, recording 18.47 million tonnes from 16.49 million tonnes in 2018.
MPOB said the significant increase in exports of palm oil products last year contributed to the decline in palm oil stocks to 2.01 million tonnes in December 2019 compared to its highest level of 3.22 million tonnes in December 2018.
On the implementation of higher blend of palm oil for biofuel, MPOB said the government would increase the biodiesel mandate for the transport sector to B20 gradually from February this year.
It added that the Indonesian government had implemented the B30 programme for the transport sector on December 23 last year.
“Implementation of high biodiesel mandates in both countries is expected to increase palm oil consumption in the domestic market and reduced the supply of palm oil to the export market, further supporting higher oil prices,” MPOB said.