MARKET DEVELOPMENT
CPO Seen Hitting Above US$600
CPO Seen Hitting Above US$600
23/11/2015 (The Star) - Palm oil expert Dr James Fry is maintaining his forecast that crude palm oil (CPO) price (FOB) could hit above US$600 per tonne by end of the first quarter 2016 without the occurance of the El Nino.
“But should a full blown El Nino happen, this will take CPO prices above US$700 per tonne by middle of next year,” he pointed out.
He expects that the world CPO output will fall due to El Nino by 6% to 7% in 2016, below this year’s production.
This is notwithstanding the growing maturity of many young palms in Indonesia.
Fry, who is LMC International Ltd chairman, was speaking at the half-day Palm Oil Refiners Association Of Malaysia (Poram) Annual Forum 2015 here yesterday.
He also said: “Should CPO price surged at such high level (above US$700 per tonne), then Indonesia CPO Fund would likely reduce its subsidies for its palm biodiesel mandate.
“If this happen, the palm olein will likely lose its markets to soybean oil in key importing markets such as India,” he explained.
According to Fry, the precise amount of subsidised palm biodiesel will depend on CPO price.
“What is certain, global palm oil stocks will likely slump next year given Indonesia’s aggressive biodiesel mandate and drought affecting yields in plantations in Indonesia and Malaysia.”
Although sales of Indonesia’s biodiesel slumped this year, he said the republic’s CPO Fund collected from its palm oil export taxes would subsidise local palm biodiesel use on a large scale next year on the back of weak CPO production.
Fry noted that the CPO premium over crude oil previously would nornally move in the opposite direction of the Malaysian Palm Oil Board stocks figure.
“However, since August this year there is solid evidence that the Indonesian CPO Fund will be subsidising biodiesel use and has lifted CPO prices in anticipation of sharp drop in stocks,” he added.
“But should a full blown El Nino happen, this will take CPO prices above US$700 per tonne by middle of next year,” he pointed out.
He expects that the world CPO output will fall due to El Nino by 6% to 7% in 2016, below this year’s production.
This is notwithstanding the growing maturity of many young palms in Indonesia.
Fry, who is LMC International Ltd chairman, was speaking at the half-day Palm Oil Refiners Association Of Malaysia (Poram) Annual Forum 2015 here yesterday.
He also said: “Should CPO price surged at such high level (above US$700 per tonne), then Indonesia CPO Fund would likely reduce its subsidies for its palm biodiesel mandate.
“If this happen, the palm olein will likely lose its markets to soybean oil in key importing markets such as India,” he explained.
According to Fry, the precise amount of subsidised palm biodiesel will depend on CPO price.
“What is certain, global palm oil stocks will likely slump next year given Indonesia’s aggressive biodiesel mandate and drought affecting yields in plantations in Indonesia and Malaysia.”
Although sales of Indonesia’s biodiesel slumped this year, he said the republic’s CPO Fund collected from its palm oil export taxes would subsidise local palm biodiesel use on a large scale next year on the back of weak CPO production.
Fry noted that the CPO premium over crude oil previously would nornally move in the opposite direction of the Malaysian Palm Oil Board stocks figure.
“However, since August this year there is solid evidence that the Indonesian CPO Fund will be subsidising biodiesel use and has lifted CPO prices in anticipation of sharp drop in stocks,” he added.