Indonesian palm oil producers look overseas<\/p>\n
JAKARTA (Reuters): Indonesia's palm oil exporters have no
\nchoice but to sell their products overseas and at prices below
\nMalaysia's because of poor domestic demand, industry sources said
\non Thursday.<\/p>\n
Rising prices of refined, bleached and deodorized (RBD) palm
\nolein, which is used as cooking oil, compared with crude degummed
\nsoyoil are reducing Malaysia's chance to attract more buyers from
\nits main markets, such as India, Pakistan and China.<\/p>\n
\"It's true the rupiah's falls have encouraged Indonesian
\ntraders to sell oils at a discount,\" Derom Bangun, chairman of
\nthe Indonesian Palm Oil Producers' Association (Gapki), told
\nReuters.<\/p>\n
\"They are not dumping (oil). They have to offer more
\nattractive prices in the overseas markets because competition is
\nvery tight,\" he added.<\/p>\n
Traders said crude palm oil is being offered in Jakarta at up
\nto Rp 2,500 a kg and demand was flat because many buyers had
\noverbought ahead of religious festivities at the end of last
\nyear.<\/p>\n
The export prices were slightly higher at Rp 2,593 a kg,
\nincluding export tax of one percent.<\/p>\n
Some Indonesian traders said they could offer a discount of up
\nto $10 a ton compared with Malaysia's palm oil. Constant
\ncongestion in Indonesia's palm oil export ports of Belawan and
\nDumai in Sumatra have also forced exporters to cut prices.<\/p>\n
Officials at Belawan port said Indonesian exports could reach
\nup to 700,000 tons in March from the normal 500,000 tons because
\na weakening rupiah, quoted at Rp 10,290\/10,340 against the dollar
\nat 0703 GMT, had boosted exports.<\/p>\n
Traders in Malaysia said April South American crude degummed
\nsoyoil was quoted at $490-$493 a ton C&F West India. May hovered
\nat $489-$490 a ton.<\/p>\n
April RBD olein was quoted at $535-540 a ton. Even after
\nincluding refining costs of $20 a ton, soyoil is still cheaper
\nfor the Indian buyers, said traders.<\/p>\n
India's towering duty on refined edible oil, which reaches 85
\npercent compared with soyoil at only 45 percent, is another major
\nbarrier. India is Malaysia's main palm oil buyer in 2000, taking
\n2.03 million tons.<\/p>\n
Some traders said it remained uncertain whether Indian buyers
\nwould completely shift to soybean oil.<\/p>\n
\"I think individual taste still matters here. I mean, you may
\nsee such a discount of up to $50 for soybean, but if you prefer
\npalm oil, you will always buy palm products,\" said one trader in
\nKuala Lumpur.<\/p>\n
But rising prices of RBD olein in India because of the tax and
\ntalk the government's plan to burn crude palm oil (CPO) as fuel
\nto ease domestic stocks and improve prices would never
\nmaterialize dragged down Malaysia's palm oil futures.<\/p>\n
\"People have realized that we are outpricing soyabean oil for
\nthe Indian, Pakistani and Chinese markets. People also realize
\nthe plan to burn CPO will never happen,\" said another Kuala
\nLumpur-based trader.<\/p>\n
Traders said there was talk Tenaga Nasional chairman
\nJamaluddin Jarjis had said it is difficult to burn CPO as fuel.
\nSate-owned Tenaga is Malaysia's largest power firm.<\/p>\n
Sources at Tenaga said they were not aware of any such
\nstatement made by Jamaluddin. \"What we know is that Tenaga is
\nstill conducting a study,\" said one source.<\/p>\n
Primary Industries Minister Lim Keng Yaik said last week
\nTenaga would start burning 50,000 tons of CPO in April. The
\ngovernment plans to burn 400,000 tons of oil this year.<\/p>\n
Malaysia's benchmark third-month June futures was 18 ringgit
\nlower at 827 ringgit ($217.63) a ton at 0720 GMT.<\/p>",
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"sponsor": "Okusi Associates",
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