CPO price jumps US$20 per ton

CPO price jumps US$20 per ton

LONDON (Reuters): Crude palm oil prices reached about US$20 a ton up at the opening of the European vegetable oil market yesterday following news that Indonesia is to raise export duty on crude palm oil (CPO) and that India is to tender to buy palm olein.

Indonesia plans to raise the export tax on CPO to help stabilise cooking oil prices, Trade and Industry Minister Rahardi Ramelan said.

"The tax will be increased to 60 percent," he said.

A surge in CPO exports and a poor distribution system have caused a shortage of cooking in Indonesia. The government discovered recently that around 80 percent of CPO output in June has been committed to export. In a normal month around 50 percent of Indonesia's CPO output goes to the local cooking oil market.

There were no firm sellers of crude palm oil at the opening in Europe.

"People were still digesting the news, but a rough guess is that price will be about $20 up," said one trader.

News that India's State Trading Corporation (STC) is seeking 6,000 tons of palm olein for July 10-25 shipment added to the bullish tone. The result of the tender is expected later today.

On Friday Indian government sources said it plans to buy 150,000 tons of palm olein to import for subsidised sales through the public distribution system during August-November. The imports were to meet the expected rise in demand for edible oils during the Hindu festival months of August to November.

In its latest report Malaysian private forecaster Ivan Wong estimated June palm oil output at 706,000 tons, 10 percent up from May. Wong projected end-June stocks at 685,000 tons against 649,842 tons in June and exports at 580,000 tons against 525,668 tons.

However, there was little reaction to these numbers. "It's mainly Indonesia driving the market followed by the Indian tender," said a trader.

In the remainder of the market soft oils stood unchanged to 0.50 guilders down while coconut oil was $10 to $12.50 higher.