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Increase In Import Duty Will Push RBD Palmolein Prices Higher Next Week

12 Aug 2017 5:17 pm
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Mumbai (commoditiescontrol) - 


Malaysian Palm Oil Futures
Malaysian palm oil futures during the week ends up by 2.8 percent at MYR 2,685/tonne, reaching its highest levels in nearly two weeks.
Earlier in the week, MPOB data showed Malaysia palm oil production surged to 21 months high in July after notching an impressive 21% rise from the previous month and 15.2% higher than same time last year. Average production rise was estimated at 14%. July production was expected to bounce back from sub-par output in June due to working days lost to Ramadan holidays. 
Meanwhile, exports widely expected to come between 4 to 5% higher, came at much lower at 1.30% to 1.398 million tons, driving end-month stocks to 15 months high or 10% above the average estimate to 1.784 million tons. 
Malaysia peak production are from August, September and October, focus will now be on export demand absorbing the rise in production. Malaysia 2017 total production is expected to reach 19.50 million tons from 17.32 million or up 12.60%.
But this did not stop CPO Futures from falling, instead prices defied expectation and moved sharply as traders are anticipating that palm oil production to decline in August month.
South Peninsular Palm Oil Association(SPOMA) pegged palm production for 1-10 August lower by 4.95 percent which improved the market sentiment and helped Malaysian palm oil futures to close higher during the week. 


Domestic RBD Palmolein Scenario
During the week, demand of RBD palmolein was very good in domestic market ahead of the Janmashtami Festival coupled with strong Malaysian Palm Oil Futures. Wholesale traders bought RBD Palmolein in bulk quanitites as the price Gap Soyoil and RBD was wide, shifting the consumption demand to the later. 


Further, the Indian government yesterday increased the import duty on palm oil by 5% to 12.50% and on RBD palmolein from 15% to 25% increasing the differential in duty by 10 percentage points to encourage local processing, due to which the prices of RBD palmolein increased sharply. RBD palmolein prices gained by Rs 33 at Kakinada port to trade at Rs 555/10kg.

"The decision will help both farmers and the local crushing industry which had to bear the brunt of higher oilseed stocks, lower domestic prices and surging supplies from major producers," said Sandeep Bajoria, chief executive of the Sunvin group, a leading vegetable oil importer.

New Delhi spends about $10 billion a year to import palm oil from Malaysia and Indonesia and relatively smaller quantities of soyoil from Brazil and Argentina.

Large inventories and lower prices have fomented a wave of protests by farmers in the big agrarian states of Maharashtra and Madhya Pradesh, ruled by Prime Minister Narendra Modi's Bharatiya Janata Party.





NEXT WEEK: RBD palmolein prices are likely to trade higher on account of good demand and increase in import duty.

  (By Commoditiescontrol Bureau; +91-22-40015516)

 


       
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