Rutam Vora, Commodity Online
Faced with the rising stocks on fresh arrivals in Malaysian markets and reduced imports by major consumer markets like India seems to be putting crude palm oil prices on a slippery surface in the coming months with first four months of the current oil year (November 2009 to Octrober 2010) showing not so significant rise in the oil imports in India.
Crude Palm Oil imports during the first four months of the current oil year were reported at 2,398,509 tonnes as compared to 2,334,463 tonnes during the same period last year with a marginal rise. Palm oil, which is the second largest edible oil in the world is consumed heavily in Indian subcontinents.
However, the demand from the millers has remained weak during past few months but a revival in demand is expected as the financial year closure is around the corner. During November-February, import of refined, bleached and diodized (RBD) palmolein was reported at 513,296 tonnes as compared to 471,177 tonnes during the same period last year.
Overall imports of vegetable oils during the first four month of the current oil year (November 2009-October 2010) was reported at 3,114,553 tonnes, a rise of 5.5 per cent from 2,951,551 tonnes in the corresponding period last year.
Average crude palm oil prices jumped around 20% during the last one year from Rs.28,252 a tonne in February 2009 to Rs.35,959 a tonne in the same month this year. RBD palmolein perked up to Rs.39,182 a tonne from Rs.33,380 a tonne.
Crude palm oil futures on Malaysia's derivatives exchanges traded lower last week on concerns over disappointing exports amid rising production. The benchmark June contract on the Bursa Malaysia Derivatives exchange ended MYR41 lower at the intraday low of MYR2,534 a metric ton, after trading in a range of MYR2,534-MYR2,565. CPO April futures remained lower on MCX at around Rs.368.50, lower by Rs.1.70 per 10 kg.
A Jakarta - based marketing centre sold 6000 tonnes of crude palm oil at a top price of 7470 rupiah (USD 0.815) per kg, against 7,434 rupiah per kg on Friday. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold any palm oil tenders on Monday.
Taking into account the bearish sentiment, Jakarta-based refiners kept the prices unchanged for refined, bleached, deodorised (RBD) palmolein, used as cooking oil at 7,850 rupiah per kg.
According to analysts, there is a bit of bearish sentiment that is weighing on prices. Malaysian exports are higher on month. Production is rising, prompting fears of rising stock levels.
Cash market prices for forward months like July, August and September are trading at a discount to nearer months, likely indicative that stocks are tipped to rise in the next few months.