STRATEGIC REVIEW KEY MARKET TRENDS SHAPING OUR BUSINESS A thorough understanding of the market trends that impact our operations enables us to take advantage of the opportunities that arise. This understanding is crucial for managing associated risks with thoughtful and timely solutions that allow us to remain competitive. STABLE DEMAND FROM KEY MARKETS UNCERTAINTY OF VEGETABLE OIL PRICES Robust demand from India and China, which are key importers of Malaysian palm oil, remains a positive force amid economic uncertainties, bolstered by global recognition of palm oil’s antioxidant properties and versatility in food, cosmetics and biofuels. Changes in worldwide supply and demand, weather, currency volatility and regulatory conditions are the key contributors to price fluctuations in Malaysia. Furthermore, Indonesia’s Domestic Market Obligation policy to protect domestic consumption also influences the stability of Malaysia’s crude palm oil (CPO) pricing. Given Indonesia’s export restrictions and increasing local biodiesel usage, the added pressure on the global vegetable oil supply impacts Southeast Asian and Latin American markets. • Exponential demand as a result of China and India’s ever-increasing urbanisation, income levels and population growth coupled with palm oil being a cost-efficient cooking oil and ingredient in the food industry • Continuously high demand requires a consistent supply and efficient production of palm oil Potential Impact • Volatility due to the interconnectedness of global markets and geopolitical developments • Price fluctuations and shifting market conditions that require nimble measures to remain competitive in the face of global challenges • Price instabilities affect industry stakeholders differently. While lower prices can be to the advantage of consumers and downstream sectors, they frequently present challenges for exporters and producers of palm oil, resulting in decreased profitability and economic growth of palm oil producing markets Potential Impact We focused on enhancing, increasing efficiency and utilising sustainable production methods to maintain sufficient supplies. How We Responded • We improved production, thus cushion price instability • We focused on analysing market trends and implementing market intervention strategies according to market conditions How We Responded Prices of vegetable oils are interrelated. With sunflower oil supply continuing to be impacted by the conflict between Russia and Ukraine, who are the world’s top exporters of the oil, supply fluctuations in the short and long term will continue to affect the pricing of other vegetable oils, particularly palm oil. Due to geopolitical unrest in Ukraine and the Middle East, we anticipate that crude oil prices will be supported, thus bringing consistency to palm oil prices. Outlook With Malaysia’s palm oil production expected to improve in the second half of 2024 and Indonesia’s national biodiesel mandate implementation likely to constrain the global palm oil supply, CPO prices are expected to stay within steady range. Outlook Boustead Plantations Berhad 046
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