Iceland Takes A U-Turn | Malaysia Is Ready With Palm Oil Supply

In April 2018, Iceland supermarkets abruptly announced the elimination of palm oil in their own-brand products. There were a few controversial reasons behind this ban, such as the production of palm oil contributing to 8% of deforestation issue, child labour involved in the Indonesian palm oil industry, and health experts claiming that palm oil was not a healthy ingredient to be consumed.

Iceland later opted for sunflower oil in substitution for palm oil. However, due to the recent war outbreak in Russia and Ukraine which brought upon a sudden shortage of sunflower oil, Iceland has no choice but to reverse its stance by accepting palm oil back into its local products. Icelands representative explains that this decision is a strict temporary solution, and they will ensure to use only certified and sustainable palm oil.

In response to Icelands statement, The Malaysian Palm Oil Council (MPOC) asserted that Malaysia is ready to assist and supply sustainable palm oil as a substitute for sunflower oil. Correspondingly, the Plantation Industries and Commodities Minister assures Europe consumers that Malaysian palm oil is produced in accordance with the Malaysian Sustainable Palm Oil Standards and fulfills the conditions of the international Roundtable on Sustainable Palm Oil.

Meanwhile, the Bursa Malaysia Derivatives recorded a drop in crude palm oil (CPO) futures towards the end of March, which was a ripple effect caused by the drop in soybean oil prices in the Chicago Board of Trade. The nearest cap of this commodity is seen around 6200-6400 and a support level around 5600. Based on the technical chart, CPO prices could have a continuous fall to 5200 if this downtrend stays intact.

From the fundamental perspective, the oil markets that were boosted during the outbreak of the Russian and Ukraine war started showing signs of weakness amid the possibility of hitting mutual agreement in peace talks. Another catalyst that adds fuel to fire is the fear of stagflation. Concerning inflation that may bring about the slowing of economic growth after the rising of interest rates (previously explained here on WikiFX https://www.wikifx.com/en/newsdetail/202203189214450605.html), which could also consequently affect the crude palm oil demand and prices.

As of writing, Malaysia‘s palm oil export wraps up the first quarter at a low ebb. This is caused by China, one of the biggest buyers of crude palm oil going into lockdown to battle a new wave of Coronavirus, as well as the increased price, and war in Europe. Mumbai-based Sunvin Group’s commodity research head Anilkumar Bagani claims that India is the only country that is still importing crude palm oil as usual among all the other countries.

<WikiFX Malaysia Original: Editor – Fion>