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.