The Palm Scribe

Hopes of Post-Corona Palm Oil Price Recovery Hung on China

Corona at palm oil sector

Concerns are ripe in Indonesia that the outbreak of the Corona Virus, also known as COVID-19 will bring down prices of the country’s main export commodity, palm oil, but hopes are also mounting that a recovering China might help reverse the course.

“Definitely there is an impact, because many countries are closing access (lock down) so that the export of palm oil will be impacted and current palm oil prices are a little bit low,” Rukaiyah Rafik, Senior Advisor to the Forum for Sustainable Palm Oil Farmers of Indonesia (FORTASBI) told the Scribe in an email.

But Rukaiyah quickly added that looking at the improving situation in China in the past few days, palm oil prices might also recover will get better, because after stopping imports of palm oil for a while China’s huge appetite for the commodity will certainly return. China is one of the top destinations for Indonesia’s CPO exports.

COVID-19 which was earlier this month labelled as a pandemic by the World Health Organization (WHO) begun with a massive outbreak in China just three months ago and has since spread all over the globe, causing equally massive infections in countries such Iran, Italy, Japan, and South Korea.

Also read: Corona Virus and Cheap Oil.

China was also cited as a possible savior for CPO by the Indonesia Commodity Index (IKI), an index publishing company, its latest IKI Indonesia Palm Oil Report released this month. In the report, IKI said that although it could not predict when the corona virus will subside and thus when CPO prices would end their downslide, it remained optimistic that CPO prices would rise again.

“IKI sees that despite CPO prices continue to get lower, there is still an opportunity for it to rise again, although slowly. This is because of quite large demands from India, and China still needs CPO for its domestic needs,” the report said.

Rukaiyah said that after COVID-19 was declared a pandemic most infections in Indonesia were in major cities such as Jakarta, Surabaya, Bandung, and Medan., and so far, no cases have been reported in rural areas. She said FORTASBI has only instructed its members against travelling to cities with known infection cases.

“We are just following instructions from the government, and we also inform oil palm farmers and labor to not go to the cities that have emergency corona cases. Several trainings and meetings have also been delayed to prevent our members from traveling out of town,” she said. “But they keep working like usual, farming and harvesting palm oil like usual,” she added.

In reply to a question put forward by The Scribe Rukaiyah said that since there had yet been no case of infection among farmers, smallholders and villagers so far, FORTASBI had not yet opened communication on the matter with the government nor has any immediate plan to do so.

As for Friday (20/3) the confirmed cases of COVID-19 in Indonesia had reached 309, with 25 people dead press report quoted Achmad Yurianto, the  spokesman of the government COVID-19 mitigation team, as having said.

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