CPO prices to plummet in September-October period<\/p>\n
JAKARTA (JP): The price of crude palm oil (CPO) on the
\ninternational market is expected to dive further from now until
\nOctober, mainly due to lower demand from India, the world's
\nlargest palm oil importer, an executive of the Association of
\nIndonesian Palm Oil Exporters (GAPKI) said on Tuesday.<\/p>\n
GAPKI chairman Derom Bangun said the price of CPO might
\nplummet by 17 percent to as low as US$290 per ton during
\nSeptember to October, from $350 in August.<\/p>\n
\"India will be reducing their CPO imports as it stockpiled
\npalm oil in July on fears of an anticipated shortage in domestic
\nsupplies. As a result of an import reduction, the prices are
\ngoing to be under pressure now,\" Derom told The Jakarta Post.<\/p>\n
India bought 2.03 million tons of palm oil from Malaysia and
\n1.6 million tons from Indonesia last year.<\/p>\n
Traders said India bought 400,000 tons of palm oil in April,
\nMay and June and the amount could fall to 200,000 tons or even
\nlower this month.<\/p>\n
Derom said palm oil prices had dropped to $320 per ton in the
\nfirst week of the month and have steadily weakened to $315 per
\nton this week.<\/p>\n
\"The prices will decline before they are expected to rebound
\nin November or December,\" he said, adding that it was due to
\nlower seasonal supplies.<\/p>\n
Derom said palm oil prices had been under pressure in the
\nJanuary-to-June period of this year due to a market glut.<\/p>\n
\"The price even went as low as $235 during that period,\" he
\nsaid.<\/p>\n
The price bounced back significantly to between $370 and $400
\nper ton in July due to a higher demand from China and India and
\nMalaysia's move to cut supplies.<\/p>\n
Malaysia is the world's biggest exporter and producer of palm
\noil, accounting for half of the world's supply. Last year,
\nMalaysia produced 10.8 million tons, of which nine million tons
\nwere sold abroad.<\/p>\n
Derom said prices started sliding in August on the wake of the
\npeak harvest season in Malaysia and Indonesia.<\/p>\n
Derom said plunging demand from India might deal a heavy blow
\nto Indonesia as the South Asian nation absorbed 40 percent of the
\ncountry's CPO exports.<\/p>\n
Aside from India, Indonesia sells palm oil to China. About
\n400,000 tons were sold to China last year.<\/p>\n
Derom said earlier that the country's palm oil exports might
\nfall short of the target of 4.2 million tons this year, partly
\ndue to the country's lower yield.<\/p>\n
He projected this year's exports at 3.9 million tons, compared
\nto 4.15 million tons last year.<\/p>\n
\"The fall in exports is due to an expected drop in production.
\nThe country's palm oil output may fall short of the target of 7.2
\nmillion tons this year because of security concerns and if the
\ndrought causing El Nino phenomenon reoccurs this year,\" he said.<\/p>\n
Indonesia produced about 6.5 million tons of palm oil last
\nyear.<\/p>\n
Meanwhile, in Kuala Lumpur, Malaysia's crude palm oil futures
\nrebounded from early lows on Tuesday but failed to break the
\nimmediate resistance of 1,019, which indicated that the downside
\nwas intact, traders and analysts said.<\/p>\n
At the close, the benchmark November futures contract ended up
\ntwo ringgit at 1,014 ringgit ($266.84) a ton on a technical
\nrebound after trading as low as 989 ringgit, according to
\nReuters.<\/p>\n
Traders said many plantations in Malaysia are entering a cycle
\nin which their trees are producing more oil, while exports are
\nexpected to be slow later this year due to falling demand by
\nIndia, the world's largest edible oil importer.<\/p>\n
Talk also circulated in the market that domestic stocks were
\nrising in Indonesia, the world's second largest palm oil producer
\nafter Malaysia, because of a slowdown in demand and rising
\noutput. (dmr)<\/p>",
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