KUALA LUMPUR, March 23 — Participants in the palm oil market need to brace for another uncertain year with the weather, economic recovery and policy changes in the West having the potential to cause heightened price volatility.
Bursa Malaysia Derivatives (BMD) chairman, who is also Bursa Malaysia Bhd chief executive officer, Datuk Muhamad Umar Swift said that in a highly volatile environment, companies should look into adopting a more robust price risk management tool to mitigate against fluctuating commodity prices and keeping their businesses competitive.
“Predicting the continuing impact of Covid-19 on businesses and the challenging economic activity, we have once again gathered speakers and experts in their respective fields to share their knowledge and experience that can help industry participants in a post-pandemic landscape,” he said in his opening address during the second Virtual Palm and Lauric Oils Price Outlook Conference (Virtual POC 2021) today.
Muhamad Umar said the pandemic had affected the global economy in three main ways: directly affecting production and demand, creating supply chain and market disruptions, and causing financial impact on firms and financial markets.
As a consequence, he said palm oil producers were forced to adapt to labour shortages which resulted in an overall 3.6 per cent decline in crude palm oil production (CPO) in 2020 compared with 2019.
“Furthermore, we have seen a higher export of CPO in the second half of 2020 due to the tax exemption by the Malaysian government.
“With these major events, the CPO price saw an increase of 29 per cent year-on-year owing to lower inventories, higher demand, as well as higher prices of soybean oil, which is a CPO substitute,” he added.
Muhamad Umar said BMD will continue to develop a sustainable marketplace by improving the ecosystem and enhancing products as a reliable hedging instrument against price volatility.
“We remain committed to fostering sustainable development and promoting responsible growth for the industry.
“From April 1, 2021, we will require only the Malaysian Sustainable Palm Oil-certified CPO to be physically delivered in our CPO futures (FCPO) contract,” he said.
The two-day Virtual POC 2021 (March 23-24) has attracted over 2,500 registrations and close to 1,700 participants from 55 countries. — Bernama
