Battling perceptions
Emmanuel Samarathisa | 04 Jan 2019 00:30
If this were 2011 and you were an oil palm grower, you’d be thinking about expanding your acreage, believing you struck gold with crude palm oil (CPO) prices soaring to RM4,000 per tonne. Alas, if only this were true today.

CPO prices have plummeted 27.8% from RM2,486 per tonne at the start of 2018 to RM1,794 in December, according to Malaysian Palm Oil Board (MPOB) data. It is now hovering around RM2,000 per tonne. The drop has had everyone, from major palm oil players to independent smallholders, reeling  with anxiety as many have seen their margins decimated since last year.

Take one of the largest companies on Bursa Malaysia, Sime Darby Plantation Bhd, as an example. For the three months to Sept 30, 2018, the group reported RM115 mil in net profit, a 57% drop year-on-year, with revenue slipping 14% to RM3.04 bil. Lower average CPO prices realised for the quarter as well as lower average palm kernel prices, according to Sime Darby, were among the reasons for the weaker performance.

Local media reports have also been documenting the plight of smallholders who are claiming tough times after not being able to sell their fresh fruit bunches due to a glut and falling prices. To top it off, an aggressive antipalm oil movement in Europe is afoot where biofuels will be phased out by 2030.

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