Mumbai (Commoditiescontrol) – Indian palm futures witnessed dull trade during first half of the weak with sluggish domestic fundamentals and closure in Bursa Malaysia Exchange on account of Lunar year celebrations. In the last two-day trade, after re-opening of BMD, Indian CPO market made a high of INR 575 and finally by end of week settled at INR 570.5 vs INR 567 a prior week.
Market is keenly focusing in MPOB data scheduled next week on 11th of Feb. Malaysia palm oil stocks are expected to fall by 6% but still to linger above 3 million tons at 3.030 million, underpinned by lower production and rising exports in January compared to the previous month.
Exports are seen rising robustly by 13% to 1.560 million tons, the highest pace of increase in 4 months from strong shipment to the E.U and Africa. Cargo surveyors Amspec and SGS reported full month exports up 15.54% and 8.50% respectively with export of all palm products rising, except for RBD palm oil, while CPKO remain unchanged.
Production was assessed falling by 10% to 1.630 million tons, inline with seasonal yield pattern with most decline expected to come from the state of Sarawak, which accounts for 20% of total Malaysia output.
Local disappearance was pegged to fall between 1.57% to 8%, but is expected to show a strong rise in February as CPO absorption for biodiesel rises following the mandatory B10 biodiesel plan for the transport sector coming into force from 1st of February. Imports are seen declining by 27% to 80,000 tons after recording over 100,000 tons in the previous 3 months.
In the meantime, Indonesia long awaited GAPKI report was finally published last week and was mostly considered as mixed for trade sentiments with lowering stocks as well as consumption figures.
Indonesia palm oil stocks plunged 16.17% to 3.261 million tons or 15 months low in line with market expectation after production fell at a higher volume than the decline in exports. Stocks are expected to see further declines in the first quarter of this year as production tapers-off and domestic consumption recover to rise.
December output slowed down by 484,000 tons or 11.63% to 3.679 million tons according to seasonal trend after posting strong growth from July to October, while overall exports consisting of CPO, laurics and biodiesel declined by 4.95% or down 159,000 tons to 3.060 million.
Domestic consumption in Indonesia recorded the first fall in 4 months in December after edging down by 19.44% to 1.177 million tons. Biodiesel demand been increasingly absorbing CPO usage in Indonesia since August of last year to meet the expanded B20 mandate which started from the 1st of September. Around 30% of the monthly domestic consumption make-up biodiesel demand. Indonesia total domestic consumption rose 22% to 13.491 million tons in 2018 from 2017 and is projected to rise to 15 million tons in 2019.
Exports of CPO fell by 9.84% in but export of palm and palm kernel oil declined by just 1.60% to 2.945 million tons in December. Overall 2018 exports rose by 3.14% to 32.024 million tons from 2017, buoyed by strong shipment to China (+18%), Africa (+13%) and to Pakistan and Bangladesh by 12.33% and 16% respective. Export to India fell by 12%.
Moving ahead, though the palm fundamentals are slightly bullish with likely fall in stocks at Malaysia and Indonesia front along with rising exports figures, market in the next week might follow global soy sentiments which are currently signaling bearish movement.
Once again concerns have been raised over US-Sino trade war as a meeting between President Donald Trump and President Xi Jinping is highly unlikely to take place before a critical March deadline to avoid higher U.S. tariffs on Chinese goods. This shall lead to sharp fall in global and domestic markets including stocks as well as commodities.
(By Commoditiescontrol Bureau)
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