PUTRAJAYA, Oct 25– IOI Corporation Bhd expects the crude palm oil (CPO) price to trade at between RM2,300 and RM2,600 per tonne in the first four months of 2020 due to declining production, said its managing director and chief executive officer, Datuk Lee Yeow Chor.
He said the squeeze in CPO production was due to the prolonged hot and dry weather, as well as the lower yield from smallholders.
“Due to lower CPO prices previously, which lasted for almost two years, quite a number of smallholders and small companies have reduced their use of fertilisers. This has had a pronounced effect two years later (that is, currently) whereby the CPO yield has dropped.
“Another factor is that the dry period in Indonesia and a little bit in Malaysia…the period between July and September, have affected production in October, so production has not gone up as much,” he told reporters after the company’s annual general meeting here, today.
There were also expectations that the dry weather would continue, which would further affect oil palm production, he added.
In another development, Lee said IOI Corp expected minimal impact on the group if India decides to ban the import of Malaysian palm oil.
“IOI does not export any volume (of palm oil) directly to India, but indirectly, there may be a small percentage because we sell to some big traders and they may sell to India. So the effect may be minimal,” he said, adding the company mostly exported its palm oil to Europe and the United States.
On Europe’s potential import ban on palm oil from Malaysia and Indonesia, Lee said the region only accounted for about five per cent of the total global palm oil consumption.
“Global palm oil consumption is about 70 million tonnes today, and Europe consumes 3.5 million tonnes or five per cent of the total volume.
“Every year, global palm oil consumption grows two per cent and we expect by 2030, if Europe’s ban materialised and import for biofuel (palm oil) is reduced to zero, that five per cent volume would have been taken up by other places,” he said.