Crude Palm Oil Case Study

From the five different segments under the Genting Plantations stated above, the plantation segments is the main sources of revenue for this company. Therefore, I had chosen to trade the Crude Palm Oil Futures (FCPO) to protect the company from the risk exposure. The risk that Genting Plantations faced or exposed was the commodity price risk. This price risk means that the price of the Crude Palm Oil will fluctuate over time. (Refer to Appendix 4). The price was mainly determined by the demand and supply. However, sometimes the demand and supply will affected by some of the factors. First and foremost factor is the competition from substitutes products or other competitors which outside the control of the company. Genting Plantations was facing the competition from the others edible oil products

This industry are required a large number of workers. However, the company may find it difficult to recruiting the workers. (Refer to Appendix 8) Thus, in order to attract the workers, the company have to offer a higher salary. Otherwise, Genting Plantations can purchase the machines to replace the uses of labour force. Both of the ways would increase the expenses use in the production. When the expenses increase, the company would increase the selling price to cover the cost and maintain their profit. If this situation cannot be ameliorate, then the price of palm oil will fluctuate due to this problem. 6 Lastly, value of Ringgit Malaysia will affect the company 's export. Value of currency is unpredictable and cannot control by the company. When Ringgit Malaysia appreciates, this make our exports less competitive as compared with other countries that export palm oil such as Indonesia. This is because the cost of import is higher, so the demand and price of Crude Palm Oil will fall. However, when the value of Ringgit Malaysia depreciates, our product will be more attractive to the foreign