MUMBAI (commodities control) - Domestic RBD Palmolein exhibited bearish tone during the week ended Saturday 24th June, largely tracking weak cues of Malaysian Palm Oil futures. Malaysian palm oil futures closed down 1.96 percent this week at MYR 2,439/tonne whereas prices have declined by 22 percent in 2017 on account of rising production in Malaysia and Indonesia coupled with poor export demand. Malaysia Palm Oil Association (MPOA) reported significant rise in production for June 1-20 with a rise of 8.30% versus same time last month. Improvement in the latest MPOA data should give a lift to Malaysia production. Estimates released today by cargo surveyors Intertek Agri Services and SGS (Malaysia) for the month of June 1-25 showed palm oil exports dropped more than 2% that will weigh on RBD palmolein prices in coming days. On domestic front their is sufficient stock with the traders to meet the near term demand, moreover they have been on the sidelines from making any bulk purchases as GST will be rolled out in July and they don’t want to carry heavy stocks ahead of it. RBD Palmolein prices at Kandla port declined by Rs 20 to trade at Rs 525/10kg during the week, and also prices have risen by USD 22 to trade at USD 685 per tonne. Domestic RBD pamolein prices are likely to remain under pressure as palm freezes in lower temperatures and demand may shift to other oils preferably soy oil. On the other hand Indonesia biodiesel mandate seen lower in 2017 as compared to last year which will further pressurize palmolein prices. Fall in crude oil prices by 2.19% on NYMEX to seven months low on Tuesday dragged soybean oil and CPO Futures lower, with bean oil taking a hit of 2.46% to 32.14 cents per-pound, the lowest in eight days on the most active second month contract on the CBOT Futures. While CPO Futures edged lower by 1.47% on the same day. Weakness in energy market was triggered by the never ending problem of supply glut which OPEC/ Non-OPEC seemingly unable to stop to firmly help lift prices. Also showing lack of evidence that supply cuts are working. Energy prices impact on palm futures mainly through soybean oil price movement. Correlation between CPO to soybean oil is nearly 90%. Inevitably tracking the movement to each other. CPO to gas oil spread was at US$ 154.88 today, a drop of 1.28%. The spread in April was US$ 100, when CPO prices was higher at RM 2567/ton. A lower CPO price and higher gas oil price is commercially attractive for biodiesel blending NEXT WEEK: RBD Palmolein prices to trade in a bear trend on account of improving production in Malaysia and Indonesia. (By Commodities control Bureau; +91-22-40015516)
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