Palm oil firm in European close on RI news
Palm oil firm in European close on RI news
LONDON (Reuters): Palm oil closed firm on the European vegetable oil market on Thursday following news that Indonesia is to keep its ban on palm oil exports until the end of March.
Traders said they were disappointed at the news, which was given in a letter of intent signed by the IMF and the Indonesian government on Thursday.
In the letter the Indonesian government said the ban would remain until the end of March and then palm oil exports would be subject to a tax of not more than 20 percent.
Crude palm oil and palm olein are currently subject to an export tax of 5 percent and 2 percent respectively.
At the end of December Indonesia banned the export of crude palm oil and palm olein for January through to March and followed this up with a ban on the export of all palm products to keep local cooking oil prices under control.
Traders said there had been some early confusion after a statement from the IMF which said that all barriers would be removed by Feb. 1, 1998.
"People thought at first someone had got in wrong, but on reflection it makes sense to keep the ban for now and avoid unrest in Indonesia because cooking oil prices have gone up," said one trader.
Traders said after the early excitement the market had been fairly quiet.
"Nothing has changed, people were hoping the ban would be lifted, but is hasn't been and we can continue trading on that basis," said a trader.
Most major shippers had been building up stocks prior to the ban and traders do not expect any effects of the ban to be felt in Europe until well into February.
Traders said supplies always get tight around this time of year as output in Malaysia and Indonesia makes a seasonal drop. "People usually build up a buffer stock to carry them over this time of year," said one trader.
"Supplies may start to get tight in mid-February, but there are other sources of palm oil and other vegetable oils people can use," said another.
"Anybody who is really short will have to pay higher prices, but part from that the market will ride the storm," the trader added.
On Jan. 12 stocks of palm oil stood at 82,089 tons in Rotterdam against 68,869 the previous week and there were 56,555 tons of coconut oil vs 59,361 tons.
Palmkernel oil stocks were 19,797 vs 11,386 tons.
At the close crude palm oil cif Europe was $15 to $10 higher with further business reported for February at $610 and $615 and Mar at $610 a ton cif.
Among products sellers were $7.50 to $2.50 higher with no further business reported.
Coconut oil continued to drift lower with closing sellers $10 to $7.50 down after April/May traded at $565 and May/Jun at $575 a ton cif.
"The market is beginning to find some consumer support at the lower levels," said one trader.
Palmkernel oil was quoted $5 down.