FCPO Related News

Malaysia’s palm oil exports during Oct. 1-20 rose 14% from the same period a month earlier to 1.06 million metric tons, cargo surveyor Intertek Agri Services said late Friday. The figure matched market expectations of 1.05 million tons. Another surveyor, SGS (Malaysia) Bhd., is scheduled to issue Oct. 1-20 shipment data Monday.

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Friday, underpinned by short covering ahead of the weekend and likely higher exports. The benchmark January contract at Bursa Malaysia Derivatives ended 0.2% higher at 2,501 ringgit a metric ton after moving in a MYR2,492-MYR2,524 range.

Traders expect palm oil exports during the Oct. 1-20 period to rise 14%-18% on month to 1.06 million tons, ahead of demand reports by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. Saturday and Monday, respectively.  Intertek put Sept. 1-20 palm oil exports at 928,110 tons while SGS put exports at 900,450 tons. Shipments of palm oil could rise in the next few weeks amid increased demand from India and as exporters with overseas refineries ship out more palm oil following a decision by the Malaysian government to revise the current CPO export tax of 23% to a graduated basis and abolish duty-free CPO export quotas.

Rabobank, however, said in a note that the expected rise in exports may not be enough to draw down palm oil stockpiles, which had risen to an all-time high of 2.48 million tons in the world’s No. 2 CPO producer. The bank lowered its CPO price forecast for the October-December period to MYR2,600/ton from a previous forecast of MYR2,800/ton.     [ Dow Jones Newswire ]

Malaysian palm oil futures rose on Friday, with market players confident of a recovery in demand thanks to strong Malaysian exports in the first half of the month and a major festival next month. "There are more purchases from India and China – India especially - because Deepavali is coming soon. They need to stock up more on palm oil," said Malaysia's Public Investment Bank analyst Chong Hoe Leong, referring to the Hindu festival of lights set for Nov. 13.

The analyst added that the current crude palm oil price is quite attractive for purchase because it's at the low base, but warned that inventory levels are expected to stay consistently high for the remainder of the year. Total traded volumes stood at 27,875 lots of 25 tonnes each, just slightly higher than the usual 25,000 lots. For the week, the edible oil was almost flat, as concerns over record stocks offset expectations of stronger demand.

However, inventories remain worrying as palm oil production shows no signs of slowing, and  Malaysia struggles to push out shipments quicker amid weaker global economic growth. "For next year, it is a bit challenging for palm oil because we can see a slowdown in market activity especially in the major consuming countries," Chong said. "That will be the major concern for the palm oil market, despite Malaysia recently imposing a lower tax structure starting from next year," he added, referring to the tax cut from the current level of 23 percent per tonne.

In a bullish sign for palm oil, Brent crude futures held steady at above $112 a barrel on Friday, but analysts and traders said a move to the downside was likely because the UK's Buzzard oilfield was expected to restart this weekend while the demand outlook remained weak. In other vegetable oil markets, U.S. soyoil for December delivery fell 0.2 percent in late Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange were almost flat.      [Reuters]

Today’s Support and Resistance level for benchmark January contract is located around 2475 and 2530 respectively.

AMSTERDAM, Oct 19 (Reuters) - Steep falls in palm oil prices are making it more attractive than other vegetable oils for use in biodiesel production, offsetting weaker demand from Europe's food industry, European refiners said. Palm oil prices in Europe's vegetable oils market have shed 20 percent since January, weighed by slowing economic growth coupled with bigger output from Indonesia and Malaysia, which together account for 90 percent of global production.

Traders and refiners say the lower prices have already triggered more demand from the biodiesel industry in the European Union. One European refiner said his refinery had seen two-fold growth in orders from the biodiesel sector in the past month. "Demand from the biodiesel industry is very strong. The discount to soyoil and rape oil has widened and producers turn more to palm oil," he said.

Biodiesel, which can be used as a substitute for mineral diesel, can be made using vegetable oils such as palm oil, rapeseed oil or soybean oil. Other possible feedstocks for the biofuel include animal fats such as tallow. Some refineries can switch the blend of oils they use based on price although there have been concerns that palm oil may be less suitable as a feedstock during winter in northern Europe due to concerns it may solidify at low temperatures. Last year, the European Union imported 5.46 million tonnes of palm oil of which 1.44 million tonnes, or 26 percent, was used for biodiesel production, while the rest was used for food or cosmetic products, statistics from analyst Oil World showed.

The gap between palm oil and soyoil, which is more expensive, rose well above $300 per tonne in October from $145 in January. Crude palm oil for November shipment was offered at $835 per tonne, cif Rotterdam, on Friday while EU soybean oil was quoted at 915 euros ($1,193) per tonne, fob exmill. Palm oil's discount to rapeseed oil, which is also used in biodiesel production in Europe, has more than doubled to $371 a tonne, from $144 in January. The widening gap is due to a surge in soybean prices to record highs this summer as drought hit the world's major exporter, the United States, damaging yields. This has pushed up prices throughout the oilseed sector up from July through September, with soyoil and rape oil prices rising at a faster pace than palm oil.

CRISIS WEIGHS ON PALM OIL IN FOOD

Traders said demand for palm oil - which is used in the food industry for products including doughnuts, biscuits, margarine, cereals and chocolate bars - was hit in eastern and southern Europe by the economic crisis. "I was in Spain last week. Unemployment there is nearly 25 percent. People have to think if they are going to pay their electricity bill or eat a doughnut. So at the end of the day they pay the bill and don't have a doughnut," another refiner said.

"People don't have money and they are cutting consumption of luxury goods. But lower use of palm oil in food in the EU is compensated with higher demand from biodiesel industry." Prices of palm oil are being pressured by slowing economic growth in the world's top buyers, China and India, traders and analysts said.

In addition, record high global grain prices have intensified calls for changes in EU and U.S. biofuel policies, which have been criticised for snatching away land that should be used for food. To that end, a decision to limit crop-based biofuels could affect palm oil consumption in future, traders said, as more sophisticated technologies develop for second-generation plants using waste or agricultural residues to make fuel. New EU rules to limit how much food can be made into biofuels are "not perfect" and make it harder to achieve overall goals on switching to low carbon energy, European Commissioners said on Wednesday.

But for producers of bioethanol, which had expected to increase their share of the biofuel market, the proposals could lock in the dominance of biodiesel. Bioethanol, generally made from grains or sugar crops, is a substitute for gasoline. "If you know the fuels market, we in Europe are hugely short on diesel, and oil companies want to fill the gap with biodiesel as much as possible," Rob Vierhout, secretary general of EU bioethanol lobby ePURE, said. (Additional reporting by Gus Trompiz in Paris; Additional reporting by Barbara Lewis in Brussels; Editing by Veronica Brown and Anthony Barker)