MARKET DEVELOPMENT
VEGOILS-Palm Up in Range-Bound Trade, Market Wary of Indonesian Levy Enforcement
VEGOILS-Palm Up in Range-Bound Trade, Market Wary of Indonesian Levy Enforcement
* Indonesia May CPO output seen up 4 pct m/m -Reuters survey
* Enforcement critical for Indonesia's biodiesel targets - analyst
17/06/2015 (Reuters) - Malaysian palm oil futures rose for the first time in three sessions on Tuesday as the tropical oil tracked gains in comparative soy markets, but was weighed down by doubts on the effectiveness of Indonesia's levies to boost its biodiesel consumption.
By the midday break, the September palm oil contract on the Bursa Malaysia Derivatives exchange had edged up 0.8 percent to 2,283 ringgit ($609.37) a tonne.
After a strong start in June which lifted the contract to over three-month highs of 2,362 ringgit, prices are now stuck in range-bound trade as they struggle to find a footing amid prospects of dwindling demand and a volatile ringgit currency.
"The market is still range-bound, between 2,250 and 2,300 ringgit," said a trader with a foreign commodities brokerage in Malaysia, adding that firmness in U.S. and Chinese soyoil markets in early Asian trade provided some support.
Total traded volume was 19,251 lots of 25 tonnes each, much higher than the usual 12,500 lots.
Analysts say that Indonesia's new implementation date of July 1 for its palm export levies may ends the uncertainty for exporters. However, the success of its biodiesel mandate, for which the levies are collected, will depend on enforcement in the top palm grower.
"Our view is that if the government can successfully utilise the funds and enforce the 15 percent biodiesel mandate, this would provide a major positive boost to CPO prices as it could soak up to 5.5 million kilolitres of biodiesel," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.
But reports that only 40 percent of the levies collected will be used to fund the biodiesel mandate could dampen prospects of the mandate, Ng added.
"This means only $280 million biodiesel subsidy for the industry, and we estimate that this can only cover 0.9 million kilolitres of biodiesel a year, which is much lower than its target."
Indonesia's crude palm oil output likely rose 4 percent to 2.774 million tonnes in May to its highest level since at least August, a Reuters survey showed, due to a seasonally high production month and as many plantations mature.
In vegetable oil markets, the U.S. July soyoil contract rose 0.3 percent by 0623 GMT, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 0.9 percent.
In other markets, crude prices rose after a cautious start on Tuesday, boosted by warnings that a tropical storm was about to hit the coast of oil producing state Texas.
Palm, soy and crude oil prices at 0625 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL5 2278 +26.00 2249 2279 670
MY PALM OIL AUG5 2284 +19.00 2258 2285 7307
MY PALM OIL SEP5 2283 +17.00 2261 2285 8627
CHINA PALM OLEIN JAN6 5184 +32.00 5106 5210 648010
CHINA SOYOIL JAN6 5882 +46.00 5790 5912 407410
CBOT SOY OIL JUL5 32.79 +4.50 32.69 32.89 3339
INDIA PALM OIL JUN5 454.70 +4.50 451.00 455.00 279
INDIA SOYOIL JUN5 609.40 +2.20 608.50 609.40 910
NYMEX CRUDE JUL5 60.11 +0.59 59.48 60.21 10874
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.3.7465 ringgit)
($1 = 6.2081 Chinese yuan)
($1 = 64.14 Indian rupees)
* Enforcement critical for Indonesia's biodiesel targets - analyst
17/06/2015 (Reuters) - Malaysian palm oil futures rose for the first time in three sessions on Tuesday as the tropical oil tracked gains in comparative soy markets, but was weighed down by doubts on the effectiveness of Indonesia's levies to boost its biodiesel consumption.
By the midday break, the September palm oil contract on the Bursa Malaysia Derivatives exchange had edged up 0.8 percent to 2,283 ringgit ($609.37) a tonne.
After a strong start in June which lifted the contract to over three-month highs of 2,362 ringgit, prices are now stuck in range-bound trade as they struggle to find a footing amid prospects of dwindling demand and a volatile ringgit currency.
"The market is still range-bound, between 2,250 and 2,300 ringgit," said a trader with a foreign commodities brokerage in Malaysia, adding that firmness in U.S. and Chinese soyoil markets in early Asian trade provided some support.
Total traded volume was 19,251 lots of 25 tonnes each, much higher than the usual 12,500 lots.
Analysts say that Indonesia's new implementation date of July 1 for its palm export levies may ends the uncertainty for exporters. However, the success of its biodiesel mandate, for which the levies are collected, will depend on enforcement in the top palm grower.
"Our view is that if the government can successfully utilise the funds and enforce the 15 percent biodiesel mandate, this would provide a major positive boost to CPO prices as it could soak up to 5.5 million kilolitres of biodiesel," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.
But reports that only 40 percent of the levies collected will be used to fund the biodiesel mandate could dampen prospects of the mandate, Ng added.
"This means only $280 million biodiesel subsidy for the industry, and we estimate that this can only cover 0.9 million kilolitres of biodiesel a year, which is much lower than its target."
Indonesia's crude palm oil output likely rose 4 percent to 2.774 million tonnes in May to its highest level since at least August, a Reuters survey showed, due to a seasonally high production month and as many plantations mature.
In vegetable oil markets, the U.S. July soyoil contract rose 0.3 percent by 0623 GMT, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 0.9 percent.
In other markets, crude prices rose after a cautious start on Tuesday, boosted by warnings that a tropical storm was about to hit the coast of oil producing state Texas.
Palm, soy and crude oil prices at 0625 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL5 2278 +26.00 2249 2279 670
MY PALM OIL AUG5 2284 +19.00 2258 2285 7307
MY PALM OIL SEP5 2283 +17.00 2261 2285 8627
CHINA PALM OLEIN JAN6 5184 +32.00 5106 5210 648010
CHINA SOYOIL JAN6 5882 +46.00 5790 5912 407410
CBOT SOY OIL JUL5 32.79 +4.50 32.69 32.89 3339
INDIA PALM OIL JUN5 454.70 +4.50 451.00 455.00 279
INDIA SOYOIL JUN5 609.40 +2.20 608.50 609.40 910
NYMEX CRUDE JUL5 60.11 +0.59 59.48 60.21 10874
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.3.7465 ringgit)
($1 = 6.2081 Chinese yuan)
($1 = 64.14 Indian rupees)