POINTERS: Journey of Palm Oil Traversing from Qe to Qt and Way Forward (A Perspective from India)

By: Ali Muhammad Lakdawala

Ali Muhammad Lakdawala : Procurement in charge for Edible Oils & Fats at India’s premier FMCG conglomerate, ITC Ltd, India.

Prior to joining ITC Ltd, he worked as a Senior Commodity Research Analyst and Trader at Anand Rathi Commodities Ltd, India the only analyst given the opportunity to operate with three different commodity verticals (Energy Market, Edible Oil & Oilseeds and Spices). Previous work experience also includes as Research Analyst with renowned organization, Unit Trust of India (UTI) Commodities.

This culminated in numerous international report publications, being quoted in various business press (Bloomberg, Dowjones, Reuters, Economic Times, Platts, etc), and invited as a Guest Speaker for Commodity Markets & Commodity Risk Management at various National & International Conferences and a Visiting lecturer at Mumbai University India.

An invited Member of : - Solvent Extractors Association of India (SEA of India) - Imported Vegetable Oil Processors Council - Indian Vegetable oil Producers Association (IVPA) - Steering Committee

Paper presented at various national & international forum on Commodities that specialises "looking beyond fundamentals for price direction”.

Education - A Commerce Graduate with Masters in Management Studies (Specialization in Finance: Rank Holder in Economics) from Mumbai University (India) and Diploma holder in Supply Chain Management - from the Confederation of Indian Industry (CII).

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Palm oil is one of the most versatile commodity: considering its important role in feeding world population and especially in case of Asia, which is the most populous continent, with approx 4.54 billion population accounting for almost 60% of the world population.

Also world's two most populated countries (.i.e.) China and India, together constitute almost 36% of the world's population.

Besides being most versatile commodity it is also highly traded commodity globally and that makes its more vulnerable to external factors besides its own fundamentals.

Paper will simplify the conundrum: how palm oil has navigated from Quantitative Easing (Qe) to Quantitative Tightening (Qt) along the way been nudged by its own fundamentals. It will also share the learning from similar event previously and what can be the way forward expected.

This is a perspective from India and it cannot be concluded without sharing the important role of palm oil in countries food security.

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Questions & Answers (6) :

Peng Kong Law

1 year ago

India is growing oil palm in a big way. How will the journey of Qe to Qt affect the expansion? Thanks.

Ali Muhammad Lakdawala:
Since it pertains to country food need for that reason expansion plan will not be impacted during the journey from Qe to Qt. Hence, momentum of expansion should continue.
1 year ago

Peng Kong Law

1 year ago

India is growing oil palm in a big way. How will the journey of Qe to Qt affect the expansion? Thanks.

Peng Kong Law

1 year ago

Mr.Ali, I agree with the other participants. that your fertiliser reach is new and interesting.Some questions if you do not mind 1) Power point 10: Fertiliser Reach has a value up to 2.0.What is it expressed in (e.g.tonnes fertiliser/kilometer?) 2) The Fertiliser Reach values must have been calculated. What are the factors considered to obtain this value. 3) On this powerpoint the statement 'High fertiliser reach= low usage." I would assume the other way around of low fertliser reach = low usage. Please clarify. Thank you very much.

Ali Muhammad Lakdawala:
Hello Peng Kong Law, Thanks for your feedback : please find my reply to your queries : 1) Power point 10: Fertiliser Reach has a value up to 2.0.What is it expressed in (e.g.tonnes fertiliser/kilometer?) (its primarily a % reach primarly indicating fertilizer being expensive component) 2) The Fertiliser Reach values must have been calculated. What are the factors considered to obtain this value. (historical prices) 3) On this powerpoint the statement 'High fertiliser reach= low usage." I would assume the other way around of low fertliser reach = low usage. Please clarify. (if fertilizer out of reach than low usage considering it will be expensive component in production cost. Hence it needs to be interpreted as High fertiliser reach/expensive fertilizer = low usage)
1 year ago

HCLeow

1 year ago

Dear Mr Ali, Your Fertilizer Reach Index is definitely very interesting. How can I get access to this Index? Is this Index show the same correlation to other crops such as soybean, canola and corn? Thank you.

Ali Muhammad Lakdawala:
Hello HC Leow, Thanks for your feedback : index is primarily created by myself taking in consideration data points available. Index it will show similar trend for overall edible oil & oilseeds complex. Thanks
1 year ago

WONG YQ:
In my opinion, the plantation companies will not going to cut the nutrient supply if the fertilizer price increased. Small holders or small farmers may select the cheaper source fertilizer to use.
1 year ago

Ali Muhammad Lakdawala:
Indeed planters might opt for value for money option but as per fertilizer reach index it needs to cool down to attract consumption (also a possible lever by planters to support falling prices : less usage of fertilizer = production been impacted considering major area especially in Malaysia are mature area n needs proper attention)
1 year ago

LAW CHOON SHENG

1 year ago

Powerpoint No.10.: Fertiliser reach index looks about the same with the ups and downs. However yields show clear signs of decrease towards the end. Please explain what is the relationship.Thank you.

Ali Muhammad Lakdawala:
Slide 10 : highlights that as Fertilizer index gets out of reach in that case its application reduces in turn it impacts the yield.
1 year ago

LAW CHOON SHENG

1 year ago

Dear Sir, You have a very interesting concept of '" Fertilizer Reach" and "Global Fertilizer Reach Index" which are new concepts. Can you briefly explain their meanings? Thank you

Ali Muhammad Lakdawala:
Fertilizer Reach Index : needs to be looked in conjuncture with key events (.i.e.) Global Financial Crisis (GFC) / COVID as palm prices tend to be influenced by external factors than its own fundamentals. Hence, price trend in sync with Fertilizer Reach Index observed during GFC /COVID is expected to repeat same trend in 2023 unless Fertilizer Reach Index coolsdown.
1 year ago