Onus to prevent a repeat of 2008 palm oil price crisis on Governments

In 2008, palm oil prices nearly halved after hitting a peak when surging crude oil prices boosted interest in biofuels derived from palm oil.

With regards to the incident, the panelists at the Palm Oil Trade Fair and Seminar (POTS Digital) 2021 shared their views on the current situation which may have similarities with it.

At the moment, crude palm oil is at a prevailing high of RM4000.

According to Dorab Mistry, the Director of Godrej International Trading & Investments Pte Ltd, there is a possibility for correction in prices as it is the essence of the commodity market.

“The loss of economics always prevails. High price leads to higher production, which eventually leads to a lower price,” he highlighted.

In a supporting statement, Rasheed Janmohammad, CEO of Westbury Group said that the law of economics is such. 

“What goes up, must come down, so this phenomenon will be there. The question is whether it will be like 2008, which is surely unanswerable. 

Do not think of 2008, last year we came up too fast and it will surely come down in Q2, but we just hope it doesn’t come down as fast as it went up. Because the market surge is unnatural at the moment. Every day we can see huge volatility,” he commented. 

Togar Sitanggang, the Vice Chairman of GAPKI shared that the market dynamic, so it is difficult to compare now to 2008 because back then there was no biodiesel or pandemic.  

“There may be some similarities, but we can’t have a copy-paste of events to gauge what happened in 2008 to happen now.’

Adding on, Thomas Mielke, the Executive Director of Oil World stated that the Government plays an important role in the outcome of a situation. For example the concern on food price inflation.

“Government decisions could complicate the adjustment of market thoughts and equilibrium. Take export tax for example. So, the Government needs to understand their decision is counter-productive.

If export taxes are raised, producers have less incentive to expand because domestic prices are declining. So there are chances of price to plummet unless there is a change in rules or mandates for the biodiesel products,” he pointed out.

Previous articleEither reduce biodiesel target or include palm oil into bio-diesel mix
Next articleEduCity Iskandar to host inaugural EduCity Leadership Summit 2021

LEAVE A REPLY

Please enter your comment!
Please enter your name here