Wednesday, January 16, 2013

Market Intelligence Crude Palm Oil 16th January, 2013

Market Intelligence

CPO climbed on speculation that stockpiles in Malaysia may drop from a record as output falls and demand recovers in India and Pakistan. Rising imports from India supported Palm Oil prices at a time when demand from China is being affected by new quality control rules. Cooking Oil imports by India jumped last month after a decline in prices of the tropical commodity and domestic Oilseed supplies spurred demand. Heavy discount of Palm products over other Oils and lower domestic production of Vegetable Oils due to slowdown in crushing pushed up the import of Palm products even during the winter season. India's consumption of Palm Oil could rise by 750,000 metric tons in the marketing year that ends Oct. 31, driven by a drop in the prices of the tropical oil and as demand for other vegetable oils eases. India may continue to buy huge quantities of Palm Oil in February also. India is showing escalating interest towards sustainable Palm Oil. The number of Indian RSPO members, has increased over five times from 2011 to 2012 comprising leading players within the Palm Oil sector in India.

Malaysia will allow shipments of the Crude Oil at zero duty for another month in February as it seeks to reduce inventory. Indonesia will not aggressively slash its CPO export tax as an effort to boost competition with Malaysia as the number of raw Palm Oil exported by the country to overseas was small. Indonesia has set up a progressive Palm Oil export structure in line with policy to boost the Palm Oil downstream industry. Increased competition from Indonesia may erode Malaysian exports, while benefiting importers such as India, China and Pakistan.

Thai Oil Palm and Palm Oil exports are in trouble, as shipments of local products are less competitive because of high prices as a result of the government's price intervention scheme. Demand also remains weak there as the economy has yet to fully recover. Fresh Palm nut prices in Thailand tumbled to only two baht per kg due to oversupply, caused by unusually wet weather that boosted output.

Palm Oil prices are likely to remain firm in future on increasing demand. Palm Oil's large discount to rival Soy Oil and increased competitiveness of Malaysia's downstream Palm Oil sector which will help to drive demand.

News For Use

Officials from China's food safety to visit Malaysia at the end of January to shed light on new quality control rules imposed by the country. The visit will give some clarity to Malaysian refiners with businesses in China. Malaysian Palm Oil Board has proposed China to grant a six-month exemption to exporters and refiners to give them time to adjust to the new rules.

Conference on the Global Trends in Sustainable Production and sourcing of Edible Oils to be held on February 1st, 2013 at Delhi.

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