STOCK LEVEL – OPIEJ

A Study on Inventory Management of Malaysian Palm Oil Products

mpob_admin — Tue, 28 Aug 2018 14:12:09 +0000

Inventory management is important to balance organisational objectives, particularly on the appropriate level of stock for raw materials and production outputs as well. The amount of inventory has a direct impact on the responsiveness and efficiency of operations of a company. In general, it can reflect also on the performance of an industry. In the Malaysian palm oil industry, most of the processing activities are well-planned or geared towards fulfilling order as demanded or known as ‘back-to-back’ approach. Hence, the movements of palm products along the supply chain are rather fast to reach respective buyers on time. As a result, the inventory levels of palm products should be low but enough to meet the demand of processing activities.

Recent Developments of Malaysian Palm Oil Stock Level

mpob_admin — Tue, 28 Aug 2018 06:34:35 +0000

The level of palm oil stock is a strong indicator of its price and it comprises crude palm oil and processed palm oil. In the past, the palm oil stock has for a long time hovered around 1 million tonnes, and this volume has become the psychological level below and above which prices tend to be bullish and bearish, respectively. The end stock mainly depends on the production and export of palm oil, while imports and local consumption play minor roles. Based on changes in the supply and demand factors, it was estimated that 1.8 million tonnes could be considered as the new level of palm oil stock for the Malaysian palm oil industry.

World Biodiesel Viability Amidst High Feedstock Prices

mpob_admin — Tue, 28 Aug 2018 05:29:44 +0000

Conventional economics says the price of crude palm oil (CPO) has an inverse relationship with stock. In the past two years, however, the economics of world oils and fats had changed, resulting in both prices and stocks rising in tandem, thus defying traditional economic theory. There are now strong signs of a linkage between the fuel price and the CPO price, which is created by the new role played by biodiesel. The article suggests that, when analysing the palm oil price, one now has to take into account of two factors, namely the petroleum price and the level of oil stocks. The petroleum price determines the price band within which palm oil will trade, while the stock level determines how high or low palm oil prices will lie within the trading range.