Future of Palm Oil : During the Time of War (Currency War)

Abstract

Purpose of the war is to degrade the enemy's will and economic capacity. It may sound surprising but wealth destruction through a market attack can be more effective than taking out enemy's ship/aircraft, when it comes to disabling an opponent. Just to narrate China has over trillions of investment denominated is US dollar and every percentage of devaluation of dollar obviously engineered by FED represents a billons of real wealth transfer from China to US. Surely any country can take it up to certain extend and recent intervention by PBOC in managing its own currency is only tip of the iceberg reply to US.Currency/Financial war is the future of boundaryless warfare.Such war can clamp down countries or even global banking system: When Banking stops, Credit stops, and when Credit stops, Trade stops and when Trade stops, ECONOMY CRUMBLES. Resultant impact of which was felt on commodities across sectors/segment wherein prices tanked to the lows witnessed during recessionary period of 2008-2009. Palm Oil nor Palm Oil producing centres are insulated from such global events. So, is the War ON??? Recent events does hint towards the same but it’s too early to conclude. Paper will explore the relationship between currency & its direct impact on commodities, as a result of current tectonic shift. Even though palm oil prices has been significantly impacted in turn making health of exporting countries to ponder upon but has there been any impact on food demand of importing countries or has importing countries stopped consuming or has it started to produce on its own??? It will be explored in detail (consumption centres).Further to that paper will explore on how exporting centres can use such crisis to its advantage (taking some quick bites from event witnessed 18years back Asian Financial Crisis) by exploring terms of trade with importing centres, by exploring currency of trade (breaking US hegemony), etc. Finally concluding with events to watchful about and analysing the market structure of palm oil and thereafter estimating the palm price forecasts for 2016.