Indonesian unrest hardly impacts palm oil supply
Indonesian unrest hardly impacts palm oil supply
LONDON (Reuters): A fresh wave of political unrest in
Indonesia is seen having little immediate impact on palm oil
supply to the world market, European vegetable oil traders said.
Indonesia is the second largest producer of palm oil after
Malaysia and coconut oil after the Philippines.
Indonesia police Chief General Bimantor said he rejected an
order on Friday from President Abdurrahman Wahid to resign,
arguing parliament had to agree to his dismissal first.
President Abdurrahman Wahid will face an impeachment hearing
in the top legislature on August 1.
"At present we can't see the unrest having that much impact,
prices did firm yesterday, but Malaysia will take over if
supplies stop altogether from Indonesia. In fact Malaysia has
started to overtake Indonesia in the export race," said one
trader on Friday.
Any further problems in Indonesia could weaken the currency
further making Indonesian palm oil more attractive than
Malaysian.
"Indonesian traders would love to export more palm oil, but if
shipments stopped because of the unrest, we reckon Malaysia could
cover for four to five months," said another trader.
Malaysian palm oil stock stood at 1.19 million tonnes at end-
April.
"We are coming into the peak production months June through to
September, so from the Malaysian point of view any disruption in
supply from Indonesia could not come at a better time," the
trader added.
Traders reported active trading in crude palm oil on the
European vegetable oil market with April fetching $250, Aug/Sep
$282.50, Oct/Dec $260 and $265.50 and Jan/Mar $272.50 a ton cif
Europe.
"This business may or may not have to do with Indonesia, but
as you can see the market is getting busy," said a trader.
At midday crude palm oil offers were $2.50 a ton up.
Traders said coconut oil was not likely to see much impact.
"Indonesia has already been discounted in the coconut oil
market with the Philippines the main supplier," said another
trader.