Mumbai (Commoditiescontrol) – MCX CPO constantly traded higher during the previous week following Malaysian palm oil market sentiments. In the end of week, CPO Feb’19 contract settled at INR 569.9, higher by almost 2% from previous week close of INR 559.5.
Global and domestic palm market opened on bullish note this week as most of the key industry analyst presented positive outlook for palm and palm products in a conference held in Karachi, Pakistan. As per Mr. Dorab Mistry (Director of Godrej International) stated that benchmark Malaysia palm oil prices are expected to rise to RM2,400 a ton by end-March as the market has "bottomed out". Growth in palm production in 2019 will be much less — possibly 3 million tons at best as a result Malaysia's output this year is estimated at 19 million to 19.5 million tons and Indonesia's at 44 million tons. Mistry pegged India's edible oil imports for the 2018/19 marketing year that started on Nov 1 at 15.7 million tons, up from 15 million tons the previous year primarily on more palm oil shipments. Similarly, Mr.James Fry (Chairman of LMC Consultancy) predicted all Veg oil including palm oil market will observe a rise by $50-100 per ton by June as the stocks shall tart coming down by mid of year.
Other than that, as per the latest publication from Oil World, in 2018-19 MY, India can import about 15.42 million tons of vegetable oils, which will exceed the result of the previous season (14.6 million tons) and will also be the maximum figure for the country over the past 5 seasons. At the same time, it is specified that the growth of imports of vegetable oils by India will be primarily due to the expected increase in purchases of palm oil.
Meanwhile, as per latest ITS release, Exports of Malaysian palm oil products for January 1 - 25 rose 18.5 percent to 1,203,512 tons from 1,015,601 tons shipped during December 1 – 25. The demand as expected was higher from EU nations at 3.02 lakh tons vs. 1.73 lakh tons imported previous month. However, demand from India and China remained weak on monthly basis. China imported 2.23 lakh tons, down by 10% while Indian imports were reported near 2.4 lakh tons, down by 14% on m-o-m basis. Demand from India and China needs to be watch cautiously in the months to come as any drop in that could resist any significant price rise.
As per recent MPOA release, 1-20 Jan Malaysian production was down by 12.4%, slightly lower than the market projections. On other hand, Malaysia 1-25 Jan export was heard up 18%, a sharp recovery after the slowdown from 1-20 Jan export. Considering the above facts, one might observe Malaysian palm oil stocks to decrease up to 3 million tons in Jan’19 from current extremely high levels of 3.21 million tons. Decline in stocks and increasing exports shall continue to support palm oil market sentiments in weeks ahead.
Looking at the other sectors, France's foreign minister said on Wednesday that a European-backed system to facilitate non-dollar trade with Iran and circumvent U.S. sanctions should be established in the coming days. Confirmation on same shall have adverse impact on the dollar value as well as crude oil price sentiments and thus shall also pressurize global veg oil markets.
Firmness in Malaysian exchange on the back of lower palm production and higher exports shall keep the short-term Indian CPO sentiments on positive note. Moreover, in other related soya market, industry players are expecting firmness in prices with positive hopes developing at US-Sino trade relations. The meeting of two nations scheduled next week shall further provide clarity on same. Compiling above factors, Indian palm market shall observe minor gains in the short run following global veg oil market sentiments.
(By Commoditiescontrol Bureau)