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Palm Oil Analytics was founded by Sathia Varqa and Gus Lim in March 2016 in Singapore with the single mission of serving the palm oil industry with mid-day and closing market price assessment and commentary. The company grew to be known globally and quoted widely. In February 2023, Palm Oil Analytics was acquired by London-based price reporting agency Fastmarkets
1. Could you elaborate on the expertise of the POA team and how it contributes to the quality of your market reports?
We publish daily market commentary and product pricing twice daily in our Palm Oil Asia Mid-day and Palm Oil Asia Closing reports. The reports offer our subscribers insights into the factors driving crude palm oil (CPO) futures daily.
We explain what's driving the CPO futures in the market commentary based on fundamentals by referring to the movement in related oils and supply and demand. While technical and sentiments are important in explaining the futures market movement, we mainly focus on the fundamentals. By fundamentals, I mean edible oils supply and demand dynamics.
We also report on cash market product prices in major origin and destination markets; Malaysia, Indonesia, China, India and the European Union. We speak to a wide range of market participants when assessing palm product prices. We also provide analysis covering monthly outlooks by engaging with a wide range of market participants online and offline.
Our primary focus is to explain palm price behaviour using fundamentals and offer insights to pricing direction to our readers.
2. In what ways does POA aim to bring clarity to the highly volatile and imperfect conditions of the palm oil market?
Markets operate in an asymmetrical world. By this I mean not all information and data are equally distributed and available to all despite the advancement of technology and the internet. This creates an imperfect market condition for market participants. Our role is to help reduce this imperfection by generating and publishing market and pricing information that will hopefully help and refine trading decisions.
We aim to offer clarity by consistently returning to fundamental analysis. We cannot ignore fundamentals in any market. If we set aside fundamentals, prices can often be heavily influenced by speculation and sentiment which can accumulate to create pricing bubbles which are ultimately unsustainable. Prices could rise or fall due to technical or other factors, but ultimately, they revert to fundamentals.
Fundamentals such as production, export, end-month stocks, imports, domestic consumption, mandates, trade policies and the dynamics of related edible oils are some of the variables to be taken into account when analysing the palm price behaviour. Although palm supply and demand particularly in Malaysia is critical in assessing palm pricing direction, we cannot ignore the behaviour of competing edible oils like soybean, rapeseed and sunflower oil as edible oils pricing tend to move in tandem with palm the most competitively priced oil.
3. How do you leverage social media in addressing the asymmetry of information?
Social media platforms are generally free and easily accessible, but they come with challenges. At Palm Oil Analytics we have always been active in using social media, viewing it as the best way to serve the industry whether you are a paid subscriber or not.
Our Palm Oil Analytics LinkedIn page has over 10,000 subscribers and followers, allowing us to publish data updates for everyone to access. This approach can help reduce information asymmetry, although we recognize that it is impossible to eliminate it entirely. Information asymmetry is a natural aspect of any market. Being active on social media and sharing information openly, we hope to bridge the gap and provide valuable insights to all our followers.
4. Could you provide examples of how POA identifies and reports on emerging opportunities and investment trends in the palm oil market?
We are now part of a bigger enterprise and this offers us plenty of opportunities to improve and refine our existing strengths but also to think about expansion into new areas. Our team today comprises four editors covering palm prices and news based in Singapore and supported by a global sales team serving thousands of customers worldwide. Our market insights come from extensive engagement with stakeholders.
The emerging opportunities in the palm market include biodiesel, used cooking oil, sustainable aviation fuel, sustainability and innovation in downstream products. We are constantly engaged with the market daily but also present at major palm and laurics conferences and exhibitions.
A significant regulatory change is imminent, the EU deforestation regulation, which will take effect at the end of this year. From 31 Dec 2024, palm oil, coffee, cocoa, soy, cattle, timber and rubber entering the EU have to be both deforestation-free and legal i.e. produced in accordance with the relevant legislation of the country of production.
According to this law exporters or importers placing these seven specified products in the EU market will need to demonstrate that their product is deforestation-free and not linked to forest degradation from the period 31 December 2020 onwards.
Exporters will need to comply with rigorous due diligence requirements, providing evidence of the date of production and adherence to EU regulations. There are several critical challenges in coming up with the due diligence requirements from the basics of conflicting definitions of what is a ‘forest’, the identification of geolocation and traceability. Malaysia is in a strong starting position to meet the EUDR requirement but there are gaps and misalignments that the Malaysian Palm Oil Council (MPOC) are working on with the EU institutions to address them.
This and other regulations that are bound to come up in the future will offer plenty of opportunity to the industry to innovate, invest and expand their markets. We at Fastmarkets Palm Oil Analytics are well-positioned to serve the industry with information, pricing and insights.
5. How do you see the role of POA evolving in the next five years within the global commodity markets?
POA was acquired last year by Fastmarkets, a British-based company that covers thousands of daily prices, from metals to battery raw materials to agriculture products. We are very optimistic about Fastmarkets Palm Oil Analytics' growth within the larger company, especially in terms of expanding the range of prices we can cover and the experience we offer to the readers.
Our technology will allow customers to customize, analyze and interact with price data across the edible oil complexes from around the globe. We also look forward to participating in more conferences, meeting more people in the industry and engaging with the market participants.