CPO

CPO counters are all up significantly today. This is after on On Friday, the Indonesian government announced plans to reduce oil and gas imports by raising the proportion of biodiesel in fuel from 7.5% to 10% while also making the blending of fuel mandatory. This measure is aimed at reducing the country’s current account deficit. This is positive for the biodiesel industry in Indonesia and CPO price. CIMB note that we are looking at a 1.26m tonnes increase in Indonesia’s consumption of CPO if the 10% blend is implemented. According to a USDA report, Indonesia consumed around 670m litres of biodiesel in 2012, equivalent to 3.93% of total diesel used by the transportation sector. House estimate that if the blend is successfully raised to 10%, usage of biodiesel in transportation sector alone will increase to 2b litres, equivalent to around 4.5% of Indonesia's annual CPO production. Add that this news could help catalyse the languishing CPO price.