Mumbai (Commoditiescontrol) – Indian palm futures after making sharp losses earlier this month finally recovered during previous week with festive buying and gain in Malaysian markets. By the end of Week, benchmark April’19 contract, after making a new low at INR 519.3, and finally settled at INR 530.1, marking gain of 3.8 points compared to previous week close of INR 526.3 per 10 kg.
As per market sources, India's palm oil imports in 2018/19 marketing year that started on Nov.1 could jump 10.3 percent from the previous year to 9.6 million tons. India's sunflower oil imports are likely to remain largely steady around 2.5 million tons but soyoil imports could fall slightly from last year's 3.05 million tons as local supplies have increased.
Meanwhile, Mr. Atul Chaturvedi, president, Solvent Extractors Association of India (SEA) has been stating that increase in import of RBD palmolein is hurting domestic industry. The association has approached finance minister Arun Jaitley seeking solutions on this issue. SEA officials have raised serious concerns that palmolein imports have skyrocketed from 1,30,459 tons in December to a whopping 241,101 tons in February’19. The duty difference of mere 5% between CPO and palmolein is simply unsustainable for domestic palm refiners. Despite, several appeals from SEA in last one-month period, Indian government has not taken any decision over palm oil duty changes. Moving forward, any changes over duty structure shall keep the market under cautious note.
A bumper harvest last year in Malaysia and Indonesia, the world's major producers, had flushed the market with palm oil and dampened prices. Stockpile concerns were further fanned, after the European Union announced plans to phase out use of palm oil in renewable transport fuel by 2030. The EU’s proposed move comes following a push by the European Parliament to phase out the use of palm oil starting in 2023, ramping up to a ban in 2030, on concerns palm oil production causes deforestation and aggravates climate change.
Malaysia and Indonesia, which account for a combined 85 per cent of the global palm oil supply, have warned that millions of farmers risk losing their livelihoods if the European Union stops using the commodity in its biofuels. Both countries have threatened to take retaliatory trade measures, including boycotting EU products, if the ban is implemented. Additionally, Malaysia and Indonesia plan to take the issue to the World Trade Organisation (WTO).
The Philippines' Department of Agriculture on last Friday sought a temporary ban on palm oil imports from Indonesia and Malaysia, saying local coconut and oil palm farmers are hurting from "extremely low" prices due to "dumping" of the commodity by the two biggest producers. Palm oil imports from Indonesia and Malaysia have increased by 900 percent over the last three years.
Meanwhile, as per SGS latest release, exports of Malaysian palm oil products for March 1-20 rose 0.8% to 925,431 tonnes, from 918,047 tonnes shipped during Feb 1-20. Independent inspection company AmSpec Agri Malaysia however reported a 2.3% fall in exports for the same period.
Looking at the overall sentiments, fading palm demand from most of the nations, huge inventories at Malaysian and Indonesian front and surplus RBD imports in India shall continue to keep overall palm prices on weak note.
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