MUMBAI (commoditiescontrol) - Domestic RBD Palmolein prices were mostly higher during the week ended on Saturday, 29th July, largely supported by strong Malaysian palm oil futures and improving domestic demand.
Malaysian palm oil futures were up 3.72 percent at MYR 2,653/tonne this week on renewed market talks of low production in Indonesia coupled with Malaysian Palm Oil exports inching as per expectation.
Ahead of the official release of GAPKI data, the monthly Reuters poll of Indonesia’s palm oil output points to a slight dip in production from 3.38 million tons in May to 3.20 million tons in June, as workers took time off for the Ramadan and Eid-al-Ftri celebrations.
The consensus between the three organizations polled also indicated a dip in exports from 2.37 million tons to 2.2 million tons, while domestic consumption rose marginally by 13,500 tons to 937,500 tons in June.
Inventory levels are seen to be up from 1.09 million tons to 1.30 million tons. While unlikely to influence the market, the Indonesian data echoes similar trends in Malaysia’s June data, where output and exports were hampered by shorter operation periods due to the Muslim festive period, particularly in Malaysia, which is dependent on foreign workers from Muslim countries.
Malaysian palm oil exports nudged up marginally by 3.16% to 1,016,689 tons in the first 25 days of July from 985,534 tons, same time last month. While exports rose 28% in the last five days, buoyed by 59,000 tons of shipment to India and the sub-continent, according to ITS data.
China was the largest buyer in percentage terms with a 46% rise to 127,226 tons from 87,300 tons, same time in June, reaching the highest volume in the first 25 days of the last five months. China been restocking palm oil since the start of July as there started dwindling in April from 582,000 ton to 476,900 tons in June.
Exports to the EU also hiked by 36% to 276,721 tons, recording its highest volume since October 2016. Besides that, exports to the Americas grew by 22% to 78,381 tons.
In Indian spot market, RBD palmolein witnessed good demand as wholesale traders were procuring in bulk quantities for the upcoming Raksha Bandhan festival.
The difference with Malaysian palm oil (FOB) and Argentina soy oil (FOB) is $140 per tonne due to which most of the soy oil demand is slowly shifting to palmolein.
RBD palmolein prices at Kandla port increased by Rs 6 to trade at Rs 530/10kg during the week.
Further traders lobby strongly feel that India is likely to raise import duty on refined and crude vegetable oils, like palm and soy oil, as local oilseed prices slumped below the government support levels so in coming week traders will try to book bulk purchases as the rates of edible oils will increase after the hike in import duty.
Local oilseed crushers are struggling to compete with cheaper edible oil imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans, even after prices tumbled by a third over the past 14 months.
India, the world's biggest palm and soybean oil importer, now relies on imports for 70 per cent of its edible oils, up from 44 per cent in 2001/02.
NEXT WEEK: RBD palmolein prices are likely to trade higher amid improving demand and expectation of Import Duty hike.
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