Will be premium
July 9th, 2016
⏰ 1 minute read
⏰ 1 minute read
A $...
If I had a $ for every time... this famous phrase would make me very rich if it applied to people saying it’s all about the palm oil price. Of course it’s easy to understand why & of course the palm oil price is very important....But here’s 3 long medium & short term reasons not to worry about price at all.
Big picture
In the big picture the price opportunities are almost unlimited. We recently showed what you can now buy online here in Jakarta, Virgin Red Palm Oil. The exotic name is in reality what we produce at our mills. Palm oil is red, full of vitamin A & E, wonderful for heart & skin. It’s a health product. While we sell at Rp6m, Virgin Red Oil sells for Rp480m!
Medium term
Second, in the medium term we can see what the future price is worth from... the futures, traded in KL. For the last one year, while the spot price has fallen to Rp6-7m, the futures price of 6 months & beyond have consistently stayed at around RM2,300. That’s about Rp8.2m or more than a 20% premium. The spot will later rise too.
Right now
No need to look even that far ahead. Our greatest rival & friend is Soy oil. There’s an impression of Palm price always being at a discount, but it’s not true. Yes when the market is weak a discount emerges & then when buyers come back, the discount disappears, every time. Right now Soy is at Rp8.5m. Palm will soon catch up.
Shortage
It’s also time to ask whether the discount will be there at all in future. Edible oil is now in a deficit. Prices should move up. Palm oil is now by far the most senior, 20m tons bigger than Soy. Palm oil in future should become the price leader, not a discount. Especially so as the health side becomes more important.
Sebastian
If I had a $ for every time... this famous phrase would make me very rich if it applied to people saying it’s all about the palm oil price. Of course it’s easy to understand why & of course the palm oil price is very important....But here’s 3 long medium & short term reasons not to worry about price at all.
Big picture
In the big picture the price opportunities are almost unlimited. We recently showed what you can now buy online here in Jakarta, Virgin Red Palm Oil. The exotic name is in reality what we produce at our mills. Palm oil is red, full of vitamin A & E, wonderful for heart & skin. It’s a health product. While we sell at Rp6m, Virgin Red Oil sells for Rp480m!
Medium term
Second, in the medium term we can see what the future price is worth from... the futures, traded in KL. For the last one year, while the spot price has fallen to Rp6-7m, the futures price of 6 months & beyond have consistently stayed at around RM2,300. That’s about Rp8.2m or more than a 20% premium. The spot will later rise too.
Right now
No need to look even that far ahead. Our greatest rival & friend is Soy oil. There’s an impression of Palm price always being at a discount, but it’s not true. Yes when the market is weak a discount emerges & then when buyers come back, the discount disappears, every time. Right now Soy is at Rp8.5m. Palm will soon catch up.
Shortage
It’s also time to ask whether the discount will be there at all in future. Edible oil is now in a deficit. Prices should move up. Palm oil is now by far the most senior, 20m tons bigger than Soy. Palm oil in future should become the price leader, not a discount. Especially so as the health side becomes more important.
Sebastian