Palm oil prices higher on RI uncertainty
Palm oil prices higher on RI uncertainty
LONDON (Reuters): Palm oil prices were sharply higher at
midday on the European vegetable oil market on growing concerns
over the situation in Indonesia.
The Indonesian government is expected to take action soon to
bring the palm oil price under control following a surge in
exports during June which has led to a critical shortage for the
local cooking oil market.
Indonesian crude palm oil exports are estimated to have
doubled during June to 200,000 tonnes from 100,000 in May.
However, traders in Europe said a poor distribution network
following the departure of many Chinese during the May riots was
also behind the shortage.
"The Chinese ran a lot of the small distribution companies and
they have not returned after the unrest in May," said one trader.
Indonesian Trade and Industry Minister Rahardi Ramelan said he
would review the 40 percent export tax on palm oil in an attempt
to protect the local market.
Indonesia imposed a 40 percent tax after it lifted a ban on
palm exports in April. But the continuing fall of the rupiah
against the dollar makes it more profitable for Indonesian
traders to export palm oil than sell it to the local market.
Traders in Europe and Malaysia also expect some kind of quota
system but the Indonesian government's options are limited by its
agreement on freeing trade in exchange for IMF help.
In Europe only afloat crude palm oil was quoted at $632.50 a
tonne cif.
Among products RBD palm oil was $10 up in a tradeless market
while olein was $12.50-$17.50 higher after Aug traded at $627.50
and $635, Aug/Sep at $625, $627.50, $629, $630 and $632.50,
Oct/Dec at $625, $627.50 and $630 and Jan/Mar at $619.50, $621,
$623.50 and $625 a tonne fob Malaysian ports.
Soft oils were also sharply higher following a rally in
Chicago on lower-than-expected soybean stocks and weather
concerns. Traders said buyers were not following very closely.
"People tend to stand back when Chicago is in weather mode -
most felt Monday's fall was overdone so last night's rally was
not unexpected," said one.
Dutch soy oil sellers were 3.50 to three guilders up while
rape oil was two guilders higher.
In the lauric oil sector prices were little changed with
coconut oil $7.50 up and palmkernel oil unchanged.