Bloomberg News

Palm Oil Tumbles to Lowest Since 2009 as Global Supplies Climb

July 24, 2013

Palm, the most-used cooking oil, sank to the lowest level since 2009 as global supplies expand to a record and demand rises at the slowest pace in more than a decade. Soybean oil dropped to the lowest since 2010.

Futures fell 1.6 percent to 2,222 ringgit ($698) a metric ton on the Bursa Malaysia Derivatives in Kuala Lumpur, the lowest close for the most-active contract since November 2009. Prices plunged 24 percent in the past year.

World stockpiles of the oil used in everything from candy to biofuel are set to surge 21 percent to a record 9.5 million tons by the end of the 2013-2014 year, as demand expands 4.4 percent, the least in 12 years, U.S. Department of Agriculture data show. Rising supplies of the more expensive soybean oil are adding to the glut, with U.S. growers set to reap their biggest-ever crop starting September.

“The overall bearish sentiment which is currently in play will only be accelerated as the production cycle increases for palm oil,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. in Mumbai. “There are no supportive demand factors at all.”

Palm production, accounting for 35 percent of cooking oil supply, will expand 5 percent to 58.1 million tons in 2013-2014, USDA data show. Output doubled over the previous decade, led by Indonesia and Malaysia. The predicted stockpiles are equal to 17 percent of demand, the highest level since 1989, data compiled by Bloomberg show.

Fifth Year

Supplies of soybean oil, the second most-consumed edible variety, will rise to a record for a fifth year and reach 44.6 million tons, the USDA predicts. The lack of any significant hot weather for the U.S. Midwest during the next 10 days will favor soybeans, DTN said in a report yesterday.

Soybean oil for delivery in December fell as much as 0.4 percent to 44.51 cents a pound on the Chicago Board of Trade, the lowest level for the most active contract since October 2010, before trading at 44.60 cents. Soybeans for delivery in November climbed 0.4 percent to $12.65 a bushel.

Refined palm oil for January delivery lost 1.2 percent to close at 5,568 yuan ($908) a ton on the Dalian Commodity Exchange, the lowest close for the most-active contract since July 2009. Soybean oil fell 1 percent to end at 7,244 yuan.

Palm Oil reserves ~ Sep 09 : 1.58 m tons

November 5, 2009 23:00 UTC+8
Crude Palm Oil Ends Down on Rising Inventories – Range Bound Trade

The benchmark January crude palm oil futures contract on BMD closed at MYR2,247 a metric ton, down MYR13 or -0.58%, little changed from the opening level of MYR2,260 after trading in a narrow range throughout the day on fears of rising inventories and spillover weakness from crude and soyoil.

Palm oil reserves were at 1.58 million tons at end-September, according to Malaysian Palm Oil Board (MPOB) estimate.

Cash palm olein for January/February/March traded at $690/ton and $687.50/ton, while April/May/June traded at $697.50/ton and $700/ton. Cash CPO for prompt shipment was offered MYR60 lower at MYR2,180/ton.
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High port stocks damp Chinese demand for palm oil

29 Oct 09

China, the world’s second largest vegetable oil buyer, has slowed palm oil purchases by 20 to 25 percent this month amid swelling stocks at its ports, which may weaken exports and put pressure on prices.

Traders say China’s palm oil stocks are up 25 percent to half a million tonnes, a marked contrast to its port soybean stocks, which have fallen by as much as half in the past three months to 2-3 million tonnes.

Soy imports are expected to surge as China’s food processors try to keep up with soyoil demand but on the palm oil front, China just bought 340,000 tonnes of mostly refined palm olein from Malaysia compared to the monthly 400,000-450,000 tonnes.

“Chinese buyers are not even price sensitive about palm oil these days,” said a Singapore-based trader who deals regularly with the China market. “They usually run away when refined palm oil prices are $650 a tonne but now that equation does not work. They are just buying hand-to-mouth, very small cargoes, as stocks are large.”

Refined palm olein prices now stand at $670 a tonne and traders expect the cash market to weaken on the lack of strong demand. Malaysia’s exports, which had a strong performance in the first half of October, have started to soften.

INDIA BUYS

India has been buying more. Cargo surveyor data for Malaysia’s Oct. 1-25 showed that the world’s top buyer of vegetable oils snapped up 38 percent more palm oil at 86,010 tonnes compared to the same period a month ago.

This week, India bought 20,000 tonnes of crude palm oil from Malaysia and Indonesia at $650 and $680 a tonne based on cost, insurance and freight (CIF), traders said. There may be new orders if crude palm oil prices fall to $625-$630 a tonne.

Cargoes would be smaller though, due to the incoming soybean harvest in India, traders say. Prices of the oilseed have fallen to 21,500 rupees ($452) a ton this week compared to 22,500 rupees a week ago as more soybeans entered the market.

“The new crushing season started this month and soybean arrivals have been gaining pace. Soyoil imports from the U.S. are non-existent for now,” said a leading trader from the Indian port city of Mumbai.

But India is on the lookout for soyoil cargoes for Dec. and Jan. delivery once the soybean crop gets processed, other dealers say.

They say orders will be directed mostly at Brazil and Argentina, which are expected to produce a bumper soybean crop after suffering from drought this year.
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Palm Oil reserves ~ Aug 09 : 1.43 m tons

September 9, 2009 7:05 UTC+8
Malaysia August palm oil stocks up 7.3%

Malaysian palm oil stocks in August climbed 7.3 per cent to a six-month high as exports returned to normal after sharply rising on festival demand a month earlier, a Reuters poll showed today. Reserves in the world’s No. 2 palm oil producer rose to 1.43 million tonnes in August, the highest since February and just above the 1.4 million requirement needed for the refinery industry to function as output also registered a slight growth.

A poll of five planters showed output rose 2.7 per cent to 1.53 million tonnes, the highest so far in 2009, as estates rushed to extract palm oil before the month-long Muslim dawn-to-dusk fasting observance of Ramadan that began end-August. “Initially the talk was about lower stocks but plantations have been working round the clock to get their Indonesian workers to harvest the palm oil before they take leave for Ramadan,” said one poll contributor.

“El Nino is a factor but there have been some good rains from end-August onwards, so production should slowly pick up.” Rains weakened in key oil palm growing regions in Malaysia thanks to El Nino weather condition in August, although recovery may be on the cards from September onwards, the head of country’s meteorology department said last week. But other poll respondents said dry weather in the past few months could still worsen yields down the line as fewer oil-rich palm flowers developed and tree stress was ongoing in top palm oil producing region of Sabah on Borneo Island as a result.

Shipments slowed down 8 per cent in August from a sharp jump a month earlier as Middle Eastern and Pakistani buyers finished buying for Ramadan where elaborate meals are cooked for the breaking of fast, traders said. “The price-sensitive Chinese and Indian buyers were waiting for the market to ease in August after the heavy purchases by the Muslim countries, so there was a bit of a slowdown,” said another respondent to the poll. “We should see normal festival demand till October on account of Chinese and Indian holidays but really, July’s 1.45 million tonnes was exceptional,” he said.

The poll pegged palm oil shipments in August at 1.33 million tonnes.

Stocks, as a result, normalised and climbed higher on the pullback in exports, although higher crude palm oil imports from rival and top producer Indonesia gave an additional boost as purchases there were much cheaper, many contributors said. “The idea is to buy Indonesia and sell from Malaysia at a higher price. It was a bit overdone but it puts the stocks at a comfortable level,” said a plantation official. Malaysia likely imported 80,000 tonnes from Indonesia last month, the poll showed.

Industry regulator Malaysian Palm Oil Board (MPOB) will issue August palm oil stocks, production and exports on Thursday. — Reuters
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Palm Oil Posts Biggest Weekly Drop in Seven Months on Soybeans

September 5, 2009 9:02 UTC+8

Palm Oil Posts Biggest Weekly Drop in Seven Months on Soybeans

Palm oil posted the biggest weekly decline in seven months on concern a record U.S. soybean harvest will push soybean oil prices lower, encouraging substitution.

The U.S., the world’s largest soybean grower and exporter, may harvest as much as 3.372 billion bushels in the marketing year that began Sept. 1, Informa Economics Inc. said yesterday. That compares with a government estimate of 3.199 billion bushels and FCStone Group Inc.’s forecast of 3.266 billion.

“Palm oil prices have been dragged down” by reports of the record harvest, Ivy Ng, an analyst at CIMB Securities in Kuala Lumpur, said by phone. “There’s been some short-term news flow that’s not favoring a further uptrend in prices.”

November-delivery palm oil dropped 1 percent to 2,197 ringgit ($623) a metric ton on the Malaysia Derivatives Exchange, completing a decline of 7.3 percent this week, the biggest since the week ended Feb. 20.

Palm oil and soybean oil, the world’s two most-consumed edible oils, are used in food and bio-fuel production.

Soybean oil for December delivery gained 0.2 percent to 34.72 cents a pound in after-hours electronic trading on the Chicago Board of Trade at 6:09 p.m. Singapore time. The futures, down 5.4 percent this week, were headed for the biggest tumble since the week ended July 10.

Inventory Outlook

Palm oil exports from Malaysia, the world’s second-biggest producer, fell 7.9 percent to 1.298 million tons in August from a month earlier, according to data tracked by Societe Generale de Surveillance and released Sept. 1.

Intertek, another independent surveyor, said Sept. 1 it tracked shipments of 1.33 million tons of palm oil from Malaysia, down 4.9 percent from a month earlier.

Falling exports may lift stockpiles, analysts say. Official August data will be released by the Malaysian Palm Oil Board next week.

Palm oil stockpiles in Malaysia, the world’s second-biggest producer, dropped in July for the first time in three months to 1.33 million tons on an export surge, the board’s data showed.

“Any correction in crude palm oil prices from here is likely to be limited,” supported by “a likely month-on-month pick-up in August 2009 crude palm oil inventory levels for Malaysia,” according to a report by JPMorgan Securitites (Malaysia) led by Simone Yeoh, a plantation analyst in Kuala Lumpur.

She forecasts inventory rising to more than 1.4 million tons, which will still be 20 percent below the same month last year. She maintained her average forecast of 2,450 ringgit in the second half of this year.