PROSPECTS AND OUTLOOK
During the first half of 2019, global production of palm oil exceeded expectations which resulted in crude palm oil market prices experiencing significant selling pressure. This resulted in average price levels, not seen in the last 10 years, of below RM2,000/MT.
However, as the Malaysian production during July-Sep was lower than expected, combined with higher demand from especially China and India, the market prices rebounded to around around RM2,200/MT.
The latest market expectations for 2020 was discussed at a price outlook conference in Mumbai during late September. Most of the expert speakers expressed a bullish market view, based on their expectations of an increased Indonesian biodiesel production combined with slower palm oil production growth in both Malaysia and Indonesia in the coming year. However, whilst cautiously optimistic, we are concerned about the impact of the ongoing trade war between the US and China as well as the subdued global economy which continues to indicate uncertainties and weaknesses.
Based on the above, the result for 2019 will be lower than 2018. Nevertheless, with the prices contracted under our forward sales policy combined with our Malaysian production improving due to further areas steadily coming into maturity from our replanted fields, the Board of Directors expects that the results will still be satisfactory.