PETALING JAYA: FGV Holdings Bhd expects the price of crude palm oil (CPO) to stay high at least until the first quarter of 2022, due to the tight supply in the oils and fats market globally.
According to its new group chief executive officer Mohd Nazrul Izam Mansor, (pic) the price of CPO is expected to be traded between RM4,100 and RM4,400 per tonne range from July to September.
“We expect the price of CPO to remain strong this year averaging at RM3,600 per tonne,” he told reporters after announcing the group’s second quarter results for the financial year 2021 yesterday.
FGV’s group divisional director of plantation sector Syed Mahdhar Syed Hussain added that the tight supply of edible oil globally, especially soybean oil, could drive the price of CPO this year.
“If you look at the overall dynamics of the oil and fats industry worldwide, soybean oil production is expected to decline 1.5% because of weather conditions while CPO production will remain flat due to the Covid-19 pandemic in Malaysia and Indonesia,” he said.
For the second quarter ended June 31, FGV’s net profit soared more than 16 times to RM338.82mil from RM20.55mil a year earlier on the back of a 42% jump in revenue to RM4.68bil.
The group attributed the performance of its top line and bottom line to higher average price of CPO realised at RM3,333 per tonne during the period, which was 44% higher compared with RM2,309 per tonne in the same quarter last year.
It also booked a one-off fair value gain on land lease agreement of RM180mil.
FGV head of group sustainability division Nurul Hasanah Ahamed Hassain Malim expects the group to resolve the withhold release order (WRO) issued by the US Customs and Border Protection (CBP) in the next six to nine months after the appointment of an independent auditor to assess its operations.
She said nine proposals from professional audit firms, non-governmental organisations, and organisations familiar with certification audit exercises have been received.
The WRO is an indication that FGV’s products cannot enter or be sold in the US market.
She said the group is fully committed to resolving the matter by focusing on enhancing its labour practices by working with the Fair Labour Association.
“We have been working together with a few non-governmental organisations, also under the umbrella initiatives, including with the migrant rights group Tenaganita, to enhance the awareness of our migrant workers with regard to their rights,” she pointed out.
In a separate announcement, FGV said it had appointed a US-based legal firm to provide support in this process and in FGV’s overall effort to address the WRO issue.
FGV is required by the CBP to undertake an audit and there are procedures and criteria that have been outlined, including surprise visits to its plantation estates.