MARKET DEVELOPMENT
POLL-Palm Oil Prices Seen Range-bound Until Year-end; Slow Demand, Soyoil Caps Gains
POLL-Palm Oil Prices Seen Range-bound Until Year-end; Slow Demand, Soyoil Caps Gains
* Palm prices seen finishing this year around 2,300 ringgit
* Would be up from 2,266 ringgit at end of 2014
* Uncertainty over El Nino, slow demand drags on prices
18/11/2015 (Reuters) - Malaysian palm oil futures are expected to hold around current levels until year-end, as slowing demand and an abundant supply of rival soyoil cap any gains, a Reuters poll showed.
A median survey of 11 planters, analysts and traders forecast prices at 2,300 ringgit ($526.32) per tonne at the end of 2015, compared to 2,266 ringgit late last year.
"The El Nino factor is largely priced in already, there has to be a further worsening in conditions before we can call for a more bullish price outlook," said a trader with a commodities brokerage in Malaysia, the world's No.2 producer of palm after Indonesia.
"The macro-economy provides a bearish backdrop, while competing oils, especially soybean oil, are still abundantly available."
Benchmark palm prices on the Bursa Malaysia Derivatives Exchange have been range-trading for the last five weeks, as palm inventories reached a near 15-year high of 2.83 million tonnes at the end of October and as export demand remains slow. They stood around 2,317 ringgit on Tuesday.
The El Nino weather pattern typically supports palm prices, as the dry weather it brings to Southeast Asia curbs yields and hits production. But Indonesian output could remain steady as new plantations mature.
Indonesia's biodiesel mandate could also impact prices. An announcement this month naming biodiesel suppliers to state-owned energy firm Pertamina boosted palm, which is used for blending into biodiesel. Pertamina also said it did not expect to import any gas oil next year to encourage biodiesel usage.
But industry players remained cautious over the outlook for biodiesel output in Indonesia.
"Prices will be influenced with the biodiesel production forecast, which for Indonesia may very well be lower than predicted. This will weigh on prices," said Martin Bek-Nielsen, finance and marketing executive director at United Plantations.
LOWER PRODUCTION, COMPETITION FROM SOY
Palm prices might rally in the coming months as production should decline at a faster rate than exports from now until the first half of 2016, according to several poll participants.
"However, this rally would only be temporary as overall supply of palm and vegetable oil will remain relatively satisfactory, despite the sharp slowdown in production growth," said Aurelia Britsch, a commodities analyst at BMI Research.
"Import demand from the EU and China will remain lacklustre, while the bumper 2015-16 soybean crop in the United States and Latin America will keep the soyoil market well-supplied."
The U.S. Department of Agriculture raised its outlook for domestic soybean production and yields to record levels last Tuesday, while Argentinian soy is being held back by farmers pending its upcoming presidential elections.
Higher crushing of soybeans for meal would increase soyoil supplies, making it more attractive than palm. Soyoil usually trades at a premium to palm oil.
PALM PRICE POLL -
Contributors Prices at Average
end-2015 Q4 2015
(in ringgit) (in ringgit)
Pacific Interlink 2,250 - United Plantations 2,275 2,275 Pelindung Bestari 2,125 2,125 Maybank 2,300 - Planter, unattributed 2,600 - Trader, unattributed 2,580 2,430 Analyst, unattributed 2,300 2,300 Analyst, unattributed 2,300 - Analyst, unattributed - 2,200 Analyst, unattributed 2,200 2,300 Trader, unattributed 2,475 2,325 MEDIAN 2,300 2,300 HIGH 2,600 2,430 LOW 2,125 2,125 ($1 = 4.3700 ringgit)
* Would be up from 2,266 ringgit at end of 2014
* Uncertainty over El Nino, slow demand drags on prices
18/11/2015 (Reuters) - Malaysian palm oil futures are expected to hold around current levels until year-end, as slowing demand and an abundant supply of rival soyoil cap any gains, a Reuters poll showed.
A median survey of 11 planters, analysts and traders forecast prices at 2,300 ringgit ($526.32) per tonne at the end of 2015, compared to 2,266 ringgit late last year.
"The El Nino factor is largely priced in already, there has to be a further worsening in conditions before we can call for a more bullish price outlook," said a trader with a commodities brokerage in Malaysia, the world's No.2 producer of palm after Indonesia.
"The macro-economy provides a bearish backdrop, while competing oils, especially soybean oil, are still abundantly available."
Benchmark palm prices on the Bursa Malaysia Derivatives Exchange have been range-trading for the last five weeks, as palm inventories reached a near 15-year high of 2.83 million tonnes at the end of October and as export demand remains slow. They stood around 2,317 ringgit on Tuesday.
The El Nino weather pattern typically supports palm prices, as the dry weather it brings to Southeast Asia curbs yields and hits production. But Indonesian output could remain steady as new plantations mature.
Indonesia's biodiesel mandate could also impact prices. An announcement this month naming biodiesel suppliers to state-owned energy firm Pertamina boosted palm, which is used for blending into biodiesel. Pertamina also said it did not expect to import any gas oil next year to encourage biodiesel usage.
But industry players remained cautious over the outlook for biodiesel output in Indonesia.
"Prices will be influenced with the biodiesel production forecast, which for Indonesia may very well be lower than predicted. This will weigh on prices," said Martin Bek-Nielsen, finance and marketing executive director at United Plantations.
LOWER PRODUCTION, COMPETITION FROM SOY
Palm prices might rally in the coming months as production should decline at a faster rate than exports from now until the first half of 2016, according to several poll participants.
"However, this rally would only be temporary as overall supply of palm and vegetable oil will remain relatively satisfactory, despite the sharp slowdown in production growth," said Aurelia Britsch, a commodities analyst at BMI Research.
"Import demand from the EU and China will remain lacklustre, while the bumper 2015-16 soybean crop in the United States and Latin America will keep the soyoil market well-supplied."
The U.S. Department of Agriculture raised its outlook for domestic soybean production and yields to record levels last Tuesday, while Argentinian soy is being held back by farmers pending its upcoming presidential elections.
Higher crushing of soybeans for meal would increase soyoil supplies, making it more attractive than palm. Soyoil usually trades at a premium to palm oil.
PALM PRICE POLL -
Contributors Prices at Average
end-2015 Q4 2015
(in ringgit) (in ringgit)
Pacific Interlink 2,250 - United Plantations 2,275 2,275 Pelindung Bestari 2,125 2,125 Maybank 2,300 - Planter, unattributed 2,600 - Trader, unattributed 2,580 2,430 Analyst, unattributed 2,300 2,300 Analyst, unattributed 2,300 - Analyst, unattributed - 2,200 Analyst, unattributed 2,200 2,300 Trader, unattributed 2,475 2,325 MEDIAN 2,300 2,300 HIGH 2,600 2,430 LOW 2,125 2,125 ($1 = 4.3700 ringgit)