MARKET DEVELOPMENT
Palm Oil Prices Seen Near Bottom by Oil World on Demand
Palm Oil Prices Seen Near Bottom by Oil World on Demand
03/09/2014 (Bloomberg) - Palm oil prices that have tumbled to the lowest since 2009 may be near a bottom in part because demand is increasing from importers in Europe, Oil World said.
Palm oil imports by the European Union rose to a record 3.37 million metric tons in the first half, about 3 percent higher than the same time in 2013, the Hamburg-based researcher said in an e-mailed report. While increasing EU demand didn’t make up for an 11 percent drop in the first half in imports by India, Pakistan and China, lower stockpiles especially in India mean trade volumes may soon rebound, according to the report.
“We believe that this year the price lows will be established not far from current levels and significantly above those registered six years ago,” Oil World said. Rising EU purchases “illustrated the ability of the European energy sector to react to attractive prices.”
Palm oil futures tumbled 27 percent this year on Bursa Malaysia Derivatives to 1,929 ringgit ($611.26) a ton on Aug. 29, the lowest since March 2009. Prices dropped amid an outlook for rising global supplies of edible oils and as forecasters saw a reduced chance for the onset of El Nino, which can disrupt supplies from Indonesia and Malaysia, the biggest producers. Palm oil is used for cooking and as an ingredient for biofuels.
Palm oil consumption in the Netherlands jumped 22 percent to a record 1 million tons from October through May, Oil World said. In Germany, declining prices for oils and fats since June has “improved the competitiveness of biodiesel and of vegetable oils used directly as fuel,” according to the report.
China’s imports of palm oil in the first half totaled 3.38 million tons, little changed from the same time last year, Oil World said. The country’s imports of biodiesel increased more than tenfold to 510,000 tons in January through July, Oil World said. Purchases mostly came from Indonesia, where “underfulfilment of the domestic biodiesel mandate added to the exportable surplus,” according to the report.
Palm oil imports by the European Union rose to a record 3.37 million metric tons in the first half, about 3 percent higher than the same time in 2013, the Hamburg-based researcher said in an e-mailed report. While increasing EU demand didn’t make up for an 11 percent drop in the first half in imports by India, Pakistan and China, lower stockpiles especially in India mean trade volumes may soon rebound, according to the report.
“We believe that this year the price lows will be established not far from current levels and significantly above those registered six years ago,” Oil World said. Rising EU purchases “illustrated the ability of the European energy sector to react to attractive prices.”
Palm oil futures tumbled 27 percent this year on Bursa Malaysia Derivatives to 1,929 ringgit ($611.26) a ton on Aug. 29, the lowest since March 2009. Prices dropped amid an outlook for rising global supplies of edible oils and as forecasters saw a reduced chance for the onset of El Nino, which can disrupt supplies from Indonesia and Malaysia, the biggest producers. Palm oil is used for cooking and as an ingredient for biofuels.
Palm oil consumption in the Netherlands jumped 22 percent to a record 1 million tons from October through May, Oil World said. In Germany, declining prices for oils and fats since June has “improved the competitiveness of biodiesel and of vegetable oils used directly as fuel,” according to the report.
China’s imports of palm oil in the first half totaled 3.38 million tons, little changed from the same time last year, Oil World said. The country’s imports of biodiesel increased more than tenfold to 510,000 tons in January through July, Oil World said. Purchases mostly came from Indonesia, where “underfulfilment of the domestic biodiesel mandate added to the exportable surplus,” according to the report.