palm oil

Futures contracts of crude palm oil on the Bursa Malaysia Derivatives were down tracking losses in CBOT soy oil and a strong ringgit against the dollar. Expectations of rise in palm oil output in 2018 have further dampened the market sentiment.

Indonesia is likely to produce 36 million tonne of palm oil this year, 3% higher than 35 million tonne last year, owing to better weather conditions. Weather is good this year as there is no El Nino, which led to dry weather conditions last year. Indonesia is the world’s largest producer of palm oil. During Jan-Jun, the country produced around 18 million tonne of the commodity. For Oct-Sep, palm oil production in Indonesia is seen flat. Increasing demand from key importing countries India and China is seen pushing Indonesia’s exports to 26 million tonne this year from 25 million tonne in 2016. During Jan-Jun, the country exported around 15 million tonne palm oil. India is the world’s largest importer of palm oil. In 2016, it had bought 5.7 million tonne of the commodity from Indonesia.

Indonesia palm oil exports to India in 2017 are estimated to be around 5.7 million tonne, largely unchanged from last year, despite a recent duty hike on import of palm oil in India. Prior to the duty hike in India, exports were good to the country. In Jan-Jun, Indonesia exported 3.4 million tonne palm oil to India. India doubled the import duty on crude palm oil to 15%. Market participants said Indonesia palm oil output is seen rising to 35.5 million tonne this year from 32.5 million tonne in 2016.

Malaysia palm oil production in 2017 is likely to rise to 19.4-19.5 million tonne from 17.2 million tonne last year, bolstered by recovery in weather conditions during the flowering period. Weather is also favorable for the palm trees and fruits are seen better. Prolonged dry spells due to El Nino had hit the crop last year but conducive weather this year resulted in better flowering and fruits.

Malaysian palm oil stockpiles climbed again in August, but did not breach the two million tonne mark due to stronger than expected exports of the commodity. Inventories of the tropical oil rose 8.79% from July to 1.94 million tonnes, the highest level since February 2016.

Palmolein oil prices firmed by Rs 50 per quintal at the wholesale oils and oilseeds market on pick up in demand from retailers. However, groudnut oil weakened on reduced offtake. Traders said pick up in demand from retailers mainly led to rise in palmolein oil prices.

Refined palmolein firmed up at the wholesale oils and oilseeds market here due to sustained demand from retail buyers.

Palmolein oil prices firmed up by Rs 50 per quintal at the wholesale oils and oilseeds market backed up by pick up in demand from retailers. However, other edible oils held steady in thin trade. Castor oil in the non-edible section, also recovered on increased offtake by consuming industries. Traders attributed the rise in palmolein oil prices to upsurge in demand from retailers. Rajkot groundnut oil prices moved down due to supply pressure.

Futures contracts of crude palm oil on Bursa Malaysia Derivatives were down as traders were cautious over the increase in production in the coming months. The most active November futures contract traded at 2,761 ringgits (41,704rupees) per tonne, down 6 ringgits from the previous close. An appreciation in the Malaysian currency against the dollar further supported the fall in prices. Strength in the ringgit against the greenback makes palm oil unattractive for Malaysian exporters.

The country will keep its zero-export duty on crude palm oil at least till the end of September 2017. So, Indonesia has been charging no duty on this product’s exports for five consecutive months now.

Global palm oil prices are likely to find short-term support in Jul-Sep as global soybean complex prices remain volatile. The financial services company has revised slightly upwards its price forecast for crude palm oil contracts on the Malaysian bourse at 2,500 ringgits (37,510 rupees) per tonne and 2,400 ringgits on an average for Jul-Sep and Oct-Dec, respectively. Palm oil prices are cheaper compared to soyoil, therefore demand for the former would increase. Increasing production of the edible oil and relatively slow exports, which led to higher Malaysian palm oil stocks, are also seen bearish for prices. CBOT soybean prices are seen lower in the coming months on record output of 114.5 million tonne in 2016-17 and selling by fund managers.

Malaysia and Indonesia discuss plans to export crude palm oil (CPO) for biodiesel to China. The two countries discussing the plan to export CPO to China. The latter is seeking to adopt 5% biodiesel blended with petroleum diesel (B5) program. China is eyeing biodiesel as it increases environmental control. The implementation of the B5 program would create a large CPO market. Therefore, Indonesia and Malaysia ought to cooperate to meet China demand. Malaysia wishes to expand biodiesel market to other countries, such as India and the Philippines.

Malaysia, the world’s second palm oil producer after Indonesia (in physical terms), keep the export duty rate unchanged at 5.5% in September. The rate was reduced from 6.5% to 5.5% in August. In September, the calculated benchmark price of Malaysian palm oil will be MYR 2677.91 ($623.57)/MT.

Refined palmolein surged further at the Vashi oils and oilseeds wholesale market here on rising demand from retailers. While, castor seeds bold and castor oil commercial recovered slightly following mild offtake from shippers and soap industries. Groundnut oil and linseed oil maintained a stable trend due to lack of any large-scale buying.

Prices of palmolein rose by Rs 50 per quintal at the wholesale oils and oilseeds market on pick-up in demand from vanaspati millers and retailers. However, non-edible oils held steady in tight movements. Traders said uptick in demand from vanaspati millers and retailers mainly attributed the rise in palmolein and soyabean oil prices.

Malaysia crude palm oil production in July was up 20.7% on month to 1.83 million tonne, and palm oil exports increased 1.3% to 1.40 million tonne. Stocks of palm oil in Malaysia were at 1.78 million tonne at the end of July, up 16.8% on month. Crude palm oil stocks were at 936,438 tonne at the end of July, up 17.3% on month. Processed palm oil stocks, also rose 16.3% on month to 847,705 tonne. Biodiesel exports were at 50,580 tonne in July, up from 9,440 tonne sold overseas in June.

Malaysia June 1-20 palm oil exports down 16.7%.

Swiss farmers reject palm oil cow supplements.

Palm oil on the European vegetable oils market continued to ease on fading demand and follow through technical selling in Malaysian palm oil futures.

Malaysian August palm oil futures fell 0.2% on a stronger ringgit currency and weaker related edible oils.