MARKET DEVELOPMENT
Will the Rally in Crude Palm Oil Sustain?
Will the Rally in Crude Palm Oil Sustain?
05/03/2014 (Hindu Business Line) - The mood here at the annual Palm and Lauric oils Price Outlook 2014-15 conference is upbeat. Traders are expecting a further surge in crude palm oil prices from the current levels of 2,800 Malaysian ringgit a tonne. The market last week rallied by over 150 ringgit a tonne because of the perceived threat of adverse weather.
In addition, biodiesel demand is mentioned as a strong price driver. Indonesia, world’s largest palm oil producer, recently decided to promote palm-based biodiesel for domestic transportation in partial replacement of mineral diesel.
Palm oil producers have not had it so good for quite sometime now. CPO prices had been range-bound at 2,400-2,500 ringgit for several weeks. The weather scare has coincided with lean season for palm oil production – November to March.
The big question everyone is asking is whether the price rally will sustain. While there are many who bet on a firm to rising market, there is a minority which believe current prices are unsustainable given the impending surge in soyabean oil production, driven mainly by South America. Indeed, the recent price surge in palm oil has been so sharp that other competing oils are either equal to or at a discount to palm oil, an unusual phenomenon.
No wonder, sceptics think high prices mean palm oil runs the risk of losing market share to other oils. Clearly, there is a tug of war between demand side and supply side factors.
Organised by Bursa Malaysia Derivatives, the annual palm oil price outlook conference will see 2,000 delegates from over 50 countries taking part. Well-known speakers such as Thomas Mielke, Oil World; Dorab Mistry, Godrej International, and James Fry, LMC International, are slated to address the conference on Wednesday. They will present the price forecast for palm oil for 2014-15.
In addition, biodiesel demand is mentioned as a strong price driver. Indonesia, world’s largest palm oil producer, recently decided to promote palm-based biodiesel for domestic transportation in partial replacement of mineral diesel.
Palm oil producers have not had it so good for quite sometime now. CPO prices had been range-bound at 2,400-2,500 ringgit for several weeks. The weather scare has coincided with lean season for palm oil production – November to March.
The big question everyone is asking is whether the price rally will sustain. While there are many who bet on a firm to rising market, there is a minority which believe current prices are unsustainable given the impending surge in soyabean oil production, driven mainly by South America. Indeed, the recent price surge in palm oil has been so sharp that other competing oils are either equal to or at a discount to palm oil, an unusual phenomenon.
No wonder, sceptics think high prices mean palm oil runs the risk of losing market share to other oils. Clearly, there is a tug of war between demand side and supply side factors.
Organised by Bursa Malaysia Derivatives, the annual palm oil price outlook conference will see 2,000 delegates from over 50 countries taking part. Well-known speakers such as Thomas Mielke, Oil World; Dorab Mistry, Godrej International, and James Fry, LMC International, are slated to address the conference on Wednesday. They will present the price forecast for palm oil for 2014-15.