In domestic market CPO nudged higher tracking firm global cues. Spot market demand also improved which supported the up trend. Traders however remained cautious as stockpiles are still high. India's veg oil imports increased drastically in January and this may pressurize prices in the log run. Palm Oil prices are also supported by its discount to Soy Oil which boosted demand.
CPO edged higher in the opening trade in international market supported by improving export demand in the first 15 days of February. The numbers suggest that Malaysia's new export tax structure has helped to boost shipments as Malaysian exporters enjoy tax advantage over Indonesia. Cargo surveyors said exports surged mainly due to an up tick in outbound sales to major Palm Oil buyers, China and the European Union.
Prices eased from elevated levels in futures market soon after Malaysia's announcement came that it will raise export taxes on Crude Palm Oil shipments in March. In a circular issued on Friday Malaysia reported that it will set CPO export duties at 4.5% in March after two consecutive months of no duties that boosted crude shipments from Malaysia and helped to ease stockpiles. Crude Palm Oil witnessed a slight uptrend this year after falling heavily last year amid speculation that holdings will drop as exports gain and supply shrinks.
Malaysia's CPO exports in March are likely to be much lower due to higher tax rate and Indian importers have bought quite a fair bit in January. Palm oil port stocks at Indian ports are also filing up and therefore buying may slow down soon. But at the same time buying from China may start buying again from next week after markets open after long new year holidays.
Palm Oil shipments from Indonesia, may decline to the lowest level in four months in February as more buyers turn to Malaysia after it extended duty free shipments to clear record stockpiles. Indonesia will release its estimate for January exports at the end of this month, and follow with the February export tax figure of 9 % in March.
News for Use
Robobank expects CPO futures to find support above MYR 2,400/ton for the remaining time in 1st quarter to encourage demand. They also said that current low prices will continue to stimulate export demand and draw down inventories supporting prices. The bank forecasts CPO prices to average MYR 2,700/ton in the second quarter of 2013, 12.5% from its projection for 1Q 2013.
Showing posts with label Market Intelligence. Show all posts
Showing posts with label Market Intelligence. Show all posts
Monday, February 18, 2013
Friday, February 8, 2013
Market Intelligence Crude Palm Oil 8th February, 2013
Market Intelligence
Palm Oil prices in international as well as domestic markets traded steady. Prices were almost flat in range bound trade as traders remained cautious ahead of the Lunar New Year holidays. Market participants were also waiting for USDA monthly supply and demand report later in the day which may show tighter Soybean stocks. Lower production of Soybean and oil could shift demand variably to Palm Oil. Sentiments were positive on optimism that export demand could go up for the tropical oil. The wide discount between Palm Oil and rival Soy Oil continues to exist. This is attracting price sensitive buyers to the cheaper available option, Palm Oil.
Malaysian markets will be closed on Monday and Tuesday for Lunar New year holiday. MPOB will publish January crop data after trading resumes on Wednesday. Market participants expect stockpiles to ease slightly from December's record high, as export demand has recovered. Traders are also eying export estimates for first 10 days by cargo surveyors scheduled on Feb. 13.
Palm Oil may witness a range bound choppy trade next week amid key data releases. Major Palm Oil consumer China, will be closed for whole week for Lunar New Year holidays.
News for Use
Malaysia's prominent investment bank lowers the average CPO price for 2013 by 12% to MYR2,500/ton from a previous forecast of MYR2,850/ton, reiterating its underweight rating on the Palm Oil sector. They also forecast a surge in Malaysian Palm Oil inventories to 2.82 million tons by the end of the year, vs 2.38 million tons reached in 2012.
Palm Oil prices in international as well as domestic markets traded steady. Prices were almost flat in range bound trade as traders remained cautious ahead of the Lunar New Year holidays. Market participants were also waiting for USDA monthly supply and demand report later in the day which may show tighter Soybean stocks. Lower production of Soybean and oil could shift demand variably to Palm Oil. Sentiments were positive on optimism that export demand could go up for the tropical oil. The wide discount between Palm Oil and rival Soy Oil continues to exist. This is attracting price sensitive buyers to the cheaper available option, Palm Oil.
Malaysian markets will be closed on Monday and Tuesday for Lunar New year holiday. MPOB will publish January crop data after trading resumes on Wednesday. Market participants expect stockpiles to ease slightly from December's record high, as export demand has recovered. Traders are also eying export estimates for first 10 days by cargo surveyors scheduled on Feb. 13.
Palm Oil may witness a range bound choppy trade next week amid key data releases. Major Palm Oil consumer China, will be closed for whole week for Lunar New Year holidays.
News for Use
Malaysia's prominent investment bank lowers the average CPO price for 2013 by 12% to MYR2,500/ton from a previous forecast of MYR2,850/ton, reiterating its underweight rating on the Palm Oil sector. They also forecast a surge in Malaysian Palm Oil inventories to 2.82 million tons by the end of the year, vs 2.38 million tons reached in 2012.
Tuesday, February 5, 2013
Market Intelligence Crude Palm Oil 5th February, 2013
Market Intelligence
Crude Palm Oil inched lower globally on concerns of uncertainty in Europe which stirred in negative sentiments. Political instability in Spain and Italy prompted investors to lock in gains. Downfall was, however, limited on fears of unpleasant weather in major Soybean growing regions in Argentina and expectations for improving Palm Oil exports.
Palm Oil exports are likely to improve in coming months, driven mainly by Malaysia's move to revamp its existing export duty structure as part of a plan to improve competitiveness and grab back market share from top producer Indonesia. Malaysia's export tax changes will aid refiners in the country as margins will improve. There are also forecasts of higher shipments to emerging markets such as Myanmar and Iran as consumption rises there.
Malaysia expects brighter days for Palm refiners on account of better margins as they ramp up production. Indonesia's move of higher export taxes will act as a blessing for refiners in Malaysia. More exports will bring down the stockpiles which will ultimately raise the price of CPO. Exports may go up this year as the Malaysian government has already discontinued the duty free export quota beginning last month. The use of B10 bio diesel containing CPO from middle of next year is also expected to stabilize the prices.
Palm Oil may trade volatile with range bound movement as traders may move to the sidelines ahead of the Lunar New Year holidays. The China markets are expected to slow down next week ahead of the Chinese New Year which falls on February 10, 2013. Investors also remain cautious over demand for Malaysian exports, even though Chinese authorities haven't refused shipments after imposing stricter quality control measures. Stockpiles in January are also close to December's record high.
Crude Palm Oil inched lower globally on concerns of uncertainty in Europe which stirred in negative sentiments. Political instability in Spain and Italy prompted investors to lock in gains. Downfall was, however, limited on fears of unpleasant weather in major Soybean growing regions in Argentina and expectations for improving Palm Oil exports.
Palm Oil exports are likely to improve in coming months, driven mainly by Malaysia's move to revamp its existing export duty structure as part of a plan to improve competitiveness and grab back market share from top producer Indonesia. Malaysia's export tax changes will aid refiners in the country as margins will improve. There are also forecasts of higher shipments to emerging markets such as Myanmar and Iran as consumption rises there.
Malaysia expects brighter days for Palm refiners on account of better margins as they ramp up production. Indonesia's move of higher export taxes will act as a blessing for refiners in Malaysia. More exports will bring down the stockpiles which will ultimately raise the price of CPO. Exports may go up this year as the Malaysian government has already discontinued the duty free export quota beginning last month. The use of B10 bio diesel containing CPO from middle of next year is also expected to stabilize the prices.
Palm Oil may trade volatile with range bound movement as traders may move to the sidelines ahead of the Lunar New Year holidays. The China markets are expected to slow down next week ahead of the Chinese New Year which falls on February 10, 2013. Investors also remain cautious over demand for Malaysian exports, even though Chinese authorities haven't refused shipments after imposing stricter quality control measures. Stockpiles in January are also close to December's record high.
Thursday, January 24, 2013
Market Intelligence Crude Palm Oil 24th January, 2013
Market Intelligence
CPO prices eased on profit booking by traders. Prices were also influenced by a fall in spot market demand. Speculators offloaded positions in tandem with weakening trend in other Edible Oils. Prices declined on concerns that exports from Malaysia may decrease this month as China is buying less after tightening quality regulations on imports.
The benchmark price of Crude Palm Oil was raised today by India. This move was done as part of efforts to curb overseas purchases and protect domestic Oilseed farmers. The government last week decided to impose a tax in order to prevent a flood of cheap Palm Oil imports from Malaysia and Indonesia, which were previously tax-free.
India's imports of Palm Oil have surged in the past few months after Indonesia and Malaysia cut exports taxes to reduce their large stocks. Global Edible Oil importers are likely to increase purchases of low priced Palm Oil in coming months, turning away from Soy Oil. Palm Oil is much cheaper than domestic branded vegetable oils and production is low because local mills lack the sophistication and infrastructure to boost output.
CPO prices eased on profit booking by traders. Prices were also influenced by a fall in spot market demand. Speculators offloaded positions in tandem with weakening trend in other Edible Oils. Prices declined on concerns that exports from Malaysia may decrease this month as China is buying less after tightening quality regulations on imports.
The benchmark price of Crude Palm Oil was raised today by India. This move was done as part of efforts to curb overseas purchases and protect domestic Oilseed farmers. The government last week decided to impose a tax in order to prevent a flood of cheap Palm Oil imports from Malaysia and Indonesia, which were previously tax-free.
India's imports of Palm Oil have surged in the past few months after Indonesia and Malaysia cut exports taxes to reduce their large stocks. Global Edible Oil importers are likely to increase purchases of low priced Palm Oil in coming months, turning away from Soy Oil. Palm Oil is much cheaper than domestic branded vegetable oils and production is low because local mills lack the sophistication and infrastructure to boost output.
Friday, January 18, 2013
Market Intelligence Crude Palm Oil 18th January, 2013
Market Intelligence
CPO closed with mild gains in domestic stop markets on rising demand. Fresh positions were created by speculators in futures market on the back of a firming trend in the domestic market and a pick up in demand mainly. The government enhanced import duty on Crude Edible Oils, while retaining the present import duty on all Refined Edible Oils. This has been done with the objective to shore up the price payable to farmers for Fresh Fruit Bunches of Oil Palm, which is linked to the landed price of CPO. With enhanced duty on CPO, price payable to farmers will increase by around Rs. 150 per MT. Impact of enhanced duty on prices of Edible Oils would be negligible at less than Rs. 1 per kg. The price may be further moderated on account of the huge stocks of Palm Oil in Malaysia and Indonesia, which may force these countries to lower the export duty currently levied in an effort to boost their exports. The CCEA also approved a plan to de freeze the tariff values of all Edible Oils including Palm Oil and notify their tariff values on the basis of their prevailing international prices. An alignment of notified tariff values with international prices will have a positive impact on the duty collected from import of Edible Oils and will provide an even field to the domestic refining industry.
In international markets CPO eased initially reacting to India's import duty structure on Crude Palm Oil imports, a move which is considered will hurt demand and leave stocks near record highs. However, prices recovered from lower levels on short covering by traders and speculators ahead of weekend. India, yesterday set a 2.5 % import duty on Crude Edible Oils to stem imports and protect domestic Oilseed growers. Some traders believe that the duty may be too small to really have an impact on Crude Palm Oil demand. The impact of higher duty was minimal in the local market as traders expect that Malaysia and Indonesia may be forced to lower export duty to clear stockpiles. Slightly better than expected economic data from China also acted as a positive cue and capped prices on downside. China's Q4 GDP growth data showed a 7.9% on-year rise vs expectations of 7.8% growth. Investors have shifted attention now to the South American weather pattern. Concerns over dry weather in major Soybean producer Argentina will likely support rival Palm Oil's prices.
Malaysia and Indonesia, are struggling with record stocks since September due to tepid global economic conditions and the euro zone crisis, which have stifled demand and caused prices to tumble in recent past. End stocks are expected to slowly shrink in the first quarter of this year on the back of seasonally slowing production, sluggish exports could crimp any recovery in prices. CPO prices in domestic markets are likely to decline in near term as demands from Indian refiners are probably going to decline. But the downside may not be significant because Palm Oil is still far cheaper than alternatives.
News for Use
At current prices Refined Palm products are offered $350-$370/ton cheaper than rival Soy Oil and a hefty $400/ton discount to Rapeseed Oil.
Events to Watch
January 1-20 export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. due on 21st January, 2013.
CPO closed with mild gains in domestic stop markets on rising demand. Fresh positions were created by speculators in futures market on the back of a firming trend in the domestic market and a pick up in demand mainly. The government enhanced import duty on Crude Edible Oils, while retaining the present import duty on all Refined Edible Oils. This has been done with the objective to shore up the price payable to farmers for Fresh Fruit Bunches of Oil Palm, which is linked to the landed price of CPO. With enhanced duty on CPO, price payable to farmers will increase by around Rs. 150 per MT. Impact of enhanced duty on prices of Edible Oils would be negligible at less than Rs. 1 per kg. The price may be further moderated on account of the huge stocks of Palm Oil in Malaysia and Indonesia, which may force these countries to lower the export duty currently levied in an effort to boost their exports. The CCEA also approved a plan to de freeze the tariff values of all Edible Oils including Palm Oil and notify their tariff values on the basis of their prevailing international prices. An alignment of notified tariff values with international prices will have a positive impact on the duty collected from import of Edible Oils and will provide an even field to the domestic refining industry.
In international markets CPO eased initially reacting to India's import duty structure on Crude Palm Oil imports, a move which is considered will hurt demand and leave stocks near record highs. However, prices recovered from lower levels on short covering by traders and speculators ahead of weekend. India, yesterday set a 2.5 % import duty on Crude Edible Oils to stem imports and protect domestic Oilseed growers. Some traders believe that the duty may be too small to really have an impact on Crude Palm Oil demand. The impact of higher duty was minimal in the local market as traders expect that Malaysia and Indonesia may be forced to lower export duty to clear stockpiles. Slightly better than expected economic data from China also acted as a positive cue and capped prices on downside. China's Q4 GDP growth data showed a 7.9% on-year rise vs expectations of 7.8% growth. Investors have shifted attention now to the South American weather pattern. Concerns over dry weather in major Soybean producer Argentina will likely support rival Palm Oil's prices.
Malaysia and Indonesia, are struggling with record stocks since September due to tepid global economic conditions and the euro zone crisis, which have stifled demand and caused prices to tumble in recent past. End stocks are expected to slowly shrink in the first quarter of this year on the back of seasonally slowing production, sluggish exports could crimp any recovery in prices. CPO prices in domestic markets are likely to decline in near term as demands from Indian refiners are probably going to decline. But the downside may not be significant because Palm Oil is still far cheaper than alternatives.
News for Use
At current prices Refined Palm products are offered $350-$370/ton cheaper than rival Soy Oil and a hefty $400/ton discount to Rapeseed Oil.
Events to Watch
January 1-20 export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. due on 21st January, 2013.
Market Intelligence Crude Palm Oil 17th January, 2013
Market Intelligence
CPO prices in the domestic markets remained steady paring recent gains as speculators offloaded their positions, taking negative cues from overseas. In international markets, Palm Oil declined on concerns that inventories may stay near record levels as exports dropped and India imposes to tax imports to protect local growers. CPO in futures market eased from recent highs due to a lack of buying momentum and concern about Refined Palm Oil shipments to China.
CPO prices fell immediately after India imposed a 2.5% import tax on Crude Edible Oils in a bid to protect its farmers against a surge of cheap imports. Investors turned bearish on Palm Oil after India's import tax announcement on concerns that this could slow export demand and keep Palm Oil stockpiles near record levels. Malaysian Palm Oil stockpiles at end-December reached an all-time high. Still, some traders are hopeful that India's tax imposition may not be completely negative for Malaysia. Palm Oil prices tumbled from highs as inventories in Indonesia and Malaysia surged because of low demand amid an economic slowdown in China and Europe. Investors locked in profits after steady gains in prices. Traders also took cues from hints of recovering demand from major buyers as temperatures become warmer and more suitable for Palm Oil.
Indian government has decided to lift a freeze on the taxable value of Edible Oils including CPO. India will revise the base price used to calculate import taxes for CPO on a fortnightly basis now onwards as result of this revision. The current base price for CPO is unchanged from last six years. The Cabinet has approved to de freeze the tariff values of all Edible Oils including Palm Oil & Soy Oil and notify their tariff values on the basis of their prevailing international prices. An alignment of notified tariff values with international prices will have a positive impact on the duty collected from import of Edible Oils and will provide an even field to the domestic refining industry.
Indonesia, will not change its export tax structure for the Edible Oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero. The Malaysian tax changes were aimed at clawing back market share from Indonesia. Rising inventories would increase pressure on Indonesia to cut its export tax to compete with Malaysia. If the government cuts the export tax, it will definitely help boost shipments. Attempts by Indonesian exporters to cut reserves are hampered by the zero tariff in Malaysia, causing inventories to stay high.
Palm Oil is expected to rebound, as investors likely to square off riskier positions ahead of the weekend. However, in longer view traders are still cautious on concerns of stock piles.
News For Use
JPMorgan cut its Palm Oil price forecast by 10 % to 2,600 Ringgit a ton for 2013-2014 from 2,900 a ton earlier, citing an overhang of inventories.
Vietnam is considering putting emergency import tariffs on Soy Oil and Palm Oil to prevent a flood of imports damaging its own producers. Under WTO rules, countries may temporarily impose such tariffs known as "safeguard measures" if they can show that there is a serious threat to domestic producers.
CPO prices in the domestic markets remained steady paring recent gains as speculators offloaded their positions, taking negative cues from overseas. In international markets, Palm Oil declined on concerns that inventories may stay near record levels as exports dropped and India imposes to tax imports to protect local growers. CPO in futures market eased from recent highs due to a lack of buying momentum and concern about Refined Palm Oil shipments to China.
CPO prices fell immediately after India imposed a 2.5% import tax on Crude Edible Oils in a bid to protect its farmers against a surge of cheap imports. Investors turned bearish on Palm Oil after India's import tax announcement on concerns that this could slow export demand and keep Palm Oil stockpiles near record levels. Malaysian Palm Oil stockpiles at end-December reached an all-time high. Still, some traders are hopeful that India's tax imposition may not be completely negative for Malaysia. Palm Oil prices tumbled from highs as inventories in Indonesia and Malaysia surged because of low demand amid an economic slowdown in China and Europe. Investors locked in profits after steady gains in prices. Traders also took cues from hints of recovering demand from major buyers as temperatures become warmer and more suitable for Palm Oil.
Indian government has decided to lift a freeze on the taxable value of Edible Oils including CPO. India will revise the base price used to calculate import taxes for CPO on a fortnightly basis now onwards as result of this revision. The current base price for CPO is unchanged from last six years. The Cabinet has approved to de freeze the tariff values of all Edible Oils including Palm Oil & Soy Oil and notify their tariff values on the basis of their prevailing international prices. An alignment of notified tariff values with international prices will have a positive impact on the duty collected from import of Edible Oils and will provide an even field to the domestic refining industry.
Indonesia, will not change its export tax structure for the Edible Oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero. The Malaysian tax changes were aimed at clawing back market share from Indonesia. Rising inventories would increase pressure on Indonesia to cut its export tax to compete with Malaysia. If the government cuts the export tax, it will definitely help boost shipments. Attempts by Indonesian exporters to cut reserves are hampered by the zero tariff in Malaysia, causing inventories to stay high.
Palm Oil is expected to rebound, as investors likely to square off riskier positions ahead of the weekend. However, in longer view traders are still cautious on concerns of stock piles.
News For Use
JPMorgan cut its Palm Oil price forecast by 10 % to 2,600 Ringgit a ton for 2013-2014 from 2,900 a ton earlier, citing an overhang of inventories.
Vietnam is considering putting emergency import tariffs on Soy Oil and Palm Oil to prevent a flood of imports damaging its own producers. Under WTO rules, countries may temporarily impose such tariffs known as "safeguard measures" if they can show that there is a serious threat to domestic producers.
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.
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.
Sunday, January 13, 2013
Market Intelligence Crude Palm Oil 11th January 2013
CPO traded lower, as investors build short positions in futures due to ample Palm Oil supplies in Malaysia. Further selling pressure is expected as higher than expected CPO output and relatively flat outbound sales pushed stocks to a record high. Palm oil shipments to China surprisingly fell ahead of tighter Chinese quality control rules.
However, some industry experts who expect the average CPO price to drop this year compared with last year are still bullish on the Palm Oil outlook. They see potential for CPO price to strengthen towards the later part of 2013. Any stresses on the global system in the form of weather or diseases can lead to production shortfalls, triggering price explosions. Industry players would be looking more intensely into ways to enhance labor productivity to reduce costs this year. Malaysian exporters are not rushing off to export directly and take advantage of the zero percent tax for this month yet as some planters may continue to sell to local refiners.
Rabobank signaled a downgrade ahead in its forecasts for prices of Palm Oil, which it had rated as its most bullish agricultural commodity for 2013, after Malaysian stocks of the vegetable oil defied market expectations by rising to a fresh record high. The uncertainty around future import demand, particularly to China, has acted to limit upside price moves. Palm Oil prices likely to remain range bound in coming weeks until a seasonal slowdown in Palm Oil production is likely seen in March. The downside in prices is also limited on account of the discount of Palm Oil prices to those in rival vegetable oils. In the medium-to-longer term this price discount is unsustainable. And a seasonal slowdown in Palm Oil production is likely to emerge by the end of the first quarter of 2013 which should narrow the price discount to Soy Oil.
Meanwhile, China reported an increase in Palm Oil imports. The demand outlook is being clouded by Chinese legislation on the use of retail Edible Oil blends, and lower reported per-store sales by major food service companies in the second half of 2012. Thailand, likely produce a record Crude Palm Oil output this year. While the record output will put some pressure on prices in the market, rising demand for bio diesel made from Palm Oil will underpin price levels.
According to Alvin Tai, senior plantation analyst at Kuala Lumpur-based OSK Investment Bank, the downside for CPO prices is relatively limited given parity to Brent crude prices which will help trigger demand for use in the energy sector. Additionally he said Malaysia's move to cut the tax on CPO exports and abolish a duty-free shipment quota from the beginning of January will have some positive impact on CPO shipments, and we should see the effects the next one to two months.
For the week ahead investors are likely to monitor export trends during the Jan 1-15 period to see whether a new tax rate has helped boost orders. Malaysia is scheduled to announce its February CPO export-tax rate on Tuesday.
However, some industry experts who expect the average CPO price to drop this year compared with last year are still bullish on the Palm Oil outlook. They see potential for CPO price to strengthen towards the later part of 2013. Any stresses on the global system in the form of weather or diseases can lead to production shortfalls, triggering price explosions. Industry players would be looking more intensely into ways to enhance labor productivity to reduce costs this year. Malaysian exporters are not rushing off to export directly and take advantage of the zero percent tax for this month yet as some planters may continue to sell to local refiners.
Rabobank signaled a downgrade ahead in its forecasts for prices of Palm Oil, which it had rated as its most bullish agricultural commodity for 2013, after Malaysian stocks of the vegetable oil defied market expectations by rising to a fresh record high. The uncertainty around future import demand, particularly to China, has acted to limit upside price moves. Palm Oil prices likely to remain range bound in coming weeks until a seasonal slowdown in Palm Oil production is likely seen in March. The downside in prices is also limited on account of the discount of Palm Oil prices to those in rival vegetable oils. In the medium-to-longer term this price discount is unsustainable. And a seasonal slowdown in Palm Oil production is likely to emerge by the end of the first quarter of 2013 which should narrow the price discount to Soy Oil.
Meanwhile, China reported an increase in Palm Oil imports. The demand outlook is being clouded by Chinese legislation on the use of retail Edible Oil blends, and lower reported per-store sales by major food service companies in the second half of 2012. Thailand, likely produce a record Crude Palm Oil output this year. While the record output will put some pressure on prices in the market, rising demand for bio diesel made from Palm Oil will underpin price levels.
According to Alvin Tai, senior plantation analyst at Kuala Lumpur-based OSK Investment Bank, the downside for CPO prices is relatively limited given parity to Brent crude prices which will help trigger demand for use in the energy sector. Additionally he said Malaysia's move to cut the tax on CPO exports and abolish a duty-free shipment quota from the beginning of January will have some positive impact on CPO shipments, and we should see the effects the next one to two months.
For the week ahead investors are likely to monitor export trends during the Jan 1-15 period to see whether a new tax rate has helped boost orders. Malaysia is scheduled to announce its February CPO export-tax rate on Tuesday.
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