ASEAN palm oil market gets nervous
ASEAN palm oil market gets nervous
Reuters, Jakarta
The Southeast Asia palm oil market is getting nervous following
more arrivals of soyoil from Argentina, with India, the world
largest edible oils buyer, already showing huge appetite for
soyoil because of lower prices.
Some 200,000 tons of soyoil -- a direct competitor of palm oil
-- from Argentina is expected to arrive in Indian ports every
month from June through October, as soybean harvests in the
world's third largest grower are set to reach full swing next
month.
"Now most of the problems have stabilized in Argentina and
renewed buying has started from India," a Malaysian trader said.
"With prices of palm oil at high premiums... June...to
October, all these months, India will take at least 200,000 tons
of soyoil," he added.
The trader said refined bleached deodorized (RBD) palm olein
was at US$711 a ton cif India after tax while crude degummed
soyoil was at $572 a ton. Even after a refining cost of $25 a
ton, soyoil is still much cheaper than palm oil.
Argentina's financial chaos including default on the national
debt and devaluation of the peso, combined with a slow soybean
harvest, halted the country's soyoil exports for two months,
helping boosting prices of palm oil.
Argentina has harvested almost a half its projected 29.5
million-ton crop but traders said farmers may continue to retain
more merchandise in the absence of a clear economic plan.
India bought around 70,000 tons of soy oil from Argentina,
Brazil and the United States in March for April arrivals, traders
said.
"India has bought a little more than 150,000 tons of soyoil in
May. We may still see some palm oil buying this month but sales
will definitely go down next month," said another Malaysian
trader.
India is expected to import 450,000 tons of palm oil in May
from top growers Malaysia and Indonesia, traders said.
Palm oil traders are cautiously watching progress of soyoil
harvests throughout South America as that, combined with an
expected higher output from Indonesia, would drag down palm oil
prices in the coming months.
"The problem is also from other markets such as Europe, China
and Pakistan...they will also prefer soy oil," one Indonesian
trader said.
Palm oil trees in Indonesia started producing more oil this
month after four months of a low production cycle, traders said.
Indonesia exported around 600,000 tons of palm oil in April,
up from the normal 500,000 tons a month. Of this, Indonesia
shipped 450,000 tons to China.
The country is also set to take advantage of a possible move
from Pakistan, one of Malaysia's main palm oil buyers, to
increase import duties for RBD palm olein and RBD palm oil by $25
a ton each in June's budget, traders said.
"Pakistan is building its refining industry. It's quite
possible it may increase the taxes on refined oil and reduce
those on crude oil," the first Malaysian trader said.
"It would open a new door for Indonesia to export CPO," he
said, adding that Pakistan imported mainly refined products in
the past years.
Traders said Pakistan may purchase up to 170,000 tons of palm
oil from Malaysia and Indonesia in May, up from a normal 80,0000
tons a month because of falling local stocks.