MUMBAI(Commoditiescontrol): This week prices of RBD palmolein declined on account of poor domestic demand coupled with weak malaysian palm oil futures.
The wholesale traders have covered their near term requirements and in coming days if the price gap between soy oil and palm oil remains low then palm oil is likely to remain under pressure in coming days. As of now Malaysian RBD Palmolein(FOB) is trading at a discount of USD 80 to Argentine soy oil(FOB).
RBD Palmolein prices were lower by USD 15 to trade at 677.50 per tonne in dollar terms (CNF) at Kandla port and also declined by Rs 13 to trade at Rs 527/10kg in rupee terms.
Demand from India, the second biggest consumer, likely to remain low in spot market as end-consumers are buying as per requirement.
Further monsoon rains have improved in most of the parts of India and weather is likely to remain cloudy next week.
Due to good rains this week temperatures have declined and generally palm oil freezes when weather is cloudy so most of the oil refiners don’t use RBD palmolein for blending with other oils.
Port stock of RBD palmolein +CPO has increased to 2,70,452 tonnes as of 10th July 2017 vs 2,38,353 on 3rd July.
Due to higher port stock importers will slow down the bulk purchases which will weigh on spot RBD palmolein prices.
Indian Government has increased the tariff value of RBD palmolein for second half of July by USD 4 to 720 per tonne.
However there is chance that Malaysian Palm Oil futures may trade higher due to bullish MPOB report and also traders are anticipating that exports for 1-15 June are likely to increase.
Malaysian total palm oil stocks dwindled 1.93% in June to 1.527 million tons against the previous month, falling deeper than the average estimate of 0.67% rise or 1.568 million, according to the latest MPOB data. The fall was supportive of prices which moved the CPO Futures to one month high on Monday, closing at RM 2593 and touching 2614 at intra day high.
Closing stocks declined, after production fell sharper than expected to 8.48% to 1.514 million tons from 1.654 million tons due to shorter working days for Eid festival break when harvesting slows down and mills run on lower utilization. Milling capacity utilization rate fell to 82.61% in June from 90% in May after FFB received at mill fell by 7.35% from May to June. Analyst expected production to fall by an average of 1.587 million or 3.93%, with CIMB comes closest at 4.91%.
Overall palm exports nudged down by 8.39% to 1.40 million tons in June, coming well within expectation. The decline was due to a sharp drop in CPO exports (-42%) and 16.27% fall in palm kernel exports. Oleo chemicals exports also fell by 10.24% to 211,479 tons while palm kernel dropped slightly by 1.08% to 156, 974 tons.
Malaysian palm oil futures closed down 0.38 percent this week at MYR 2,566/tonne on account of improving production in top producing nations Malaysia and Indonesia.
In futures market this week, RBD Pamolein most active July delivery contract on Multi Commodity Exchange (MCX) closed 1.86 percent lower at Rs 525.30/10kg.
NEXT WEEK: Indian RBD palmolein will focus on demand which is likely to remain low due to higher port stock and unfavorable weather for consumption.
(By Commoditiescontrol Bureau; +91-22-40015533)
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