ECONOMYNEXT – Sri Lanka’s Carsons Cumberbatch Plc, which owns oil palm farms in Malaysia and Indonesia and processing plants, said bumper harvests boosted volumes but prices fell to a 10 year low in late 2018.
After two years of droughts, palm oil has recorded a bumper harvest in the second half of 2018 and crude palm oil (CPO) had hit a 10 year low in November 2018, the firm told shareholders in the annual report.
Soybean prices had hit a 10 year low in September 2018.
The average CPO price in Bursa Malaysia was 521 dollar per metric tonnes, down from 623 a year earlier.
The average palm kernel price had fallen to 293 US dollars per metric tonne in 2018 from an average of 450 metric tonnes in 2017.
In 2018 the US dollar had strengthened putting several pegged exchange rates under pressure as well as food commodities and oil.
Coconut prices have also fallen sharply in Sri Lanka.
Crude oil had averaged about 63 dollar a barrel, discouraging incentives to use palm oil in bio diesel. Both Malaysia and Indonesia had increased bio-fuel usage levels to increase palm oil use and reduce inventory build-up
At Carsons fresh fruit bunch (FFB) production had grown 27 percent to 1.27 million metric tonnes in the year to March 2019 helped by better weather.
The group had sold 315,000 metric tonnes of CPO up 35 percent from a year earlier, helped by fruits purchased from third parties which were up 185 percent.
Mill utilization levels were the highest in the past 5 years, the firm said.
Revenues of the palm oil sector had grown 19 percent to 28.98 billion rupees in the year to March 2019, but profits fell to 320 million rupees from 1.1 billion rupees a year earlier, the firm said.
"This is mainly due to increase in forex losses on account of USD movements against Indonesian Rupiah, lower
biological asset valuations due to reduction in CPO price, and higher interest costs," Chairman Tilak de Soyza told shareholders.
"In the Oils and Fats sector, prices of lauric oils declined during the year with the price of main feedstock,
Palm kernel, decreasing.
"This price decrease along with a dedicated supply from our own upstream plantations in Indonesia, enabled our
plant to increase its utilization resulting in increased production and sales of specialty fats during the year. (Colombo/Juy31/2019)