Welcome Guest   |  Login   |   Signup
JG Logo
Thu, May 24, 2012
Archive Search

Indonesian Palm Oil Must Surge ‘Rapidly’ to Moderate Demand
August 06, 2010

Share This Page
2
13
0
0
Share with google+ :


Post a comment
Please login to post comment

Comments

Be the first to write your opinion!

Indonesia. Palm oil must jump by as much as 24 percent to cool export demand as output declines in Malaysia, the second-biggest grower, and weather damages canola crops in Europe and Canada, according to Godrej International.

“The market needs to move ahead rapidly so that there is time for rationing to set in,” Dorab Mistry, a director at Godrej, said in an e-mail from London.

“At 2,600 ringgit [$824], you can’t match demand with supply. And on top of that, the supply is shrinking.”

Palm oil has rallied 13 percent from a seven-month low on July 7 on optimism consumption will increase in Asian nations, which mark a number of festivals in the September quarter, and on concerns that poor weather may disrupt output in Indonesia and Malaysia, the world’s top producers.

Malaysian stockpiles touched a 10-month low in June as exports rose, according to the nation’s palm oil board.

“The consumer has got it wrong and is still in denial,” said Mistry. “He is watching as one piece of bad news after another comes in each week. At some stage, the consumer needs to get ahead of the game rather than keep fighting the market.”

Mistry, who has traded vegetable oils for more than three decades, correctly predicted in March that palm oil prices would gain in the second half. He said futures may trade between 3,000 and 3,200 ringgit after June. Godrej is one of India’s biggest cooking oil importers.

“In Malaysia, the effect of El Nino of last year coupled with shortages of labor has meant that the trees are facing a lot of stress during this critical low-cycle period,” Mistry said.

“The situation in Indonesia is no better and with the Ramadan season at our doorstep, we can expect a recovery in production only after Hari Raya is completed in mid-September.”

“Prices right now are just reacting to crude oil,” said Arhnue Tan, an analyst at ECM Libra Capital. “Another crude oil rally is going to lift all commodities, whether or not fundamentals are positive.”

Crude oil has jumped 14 percent over the past year and reached $82.97 a barrel yesterday, the highest intraday price since May 4. The price fell 0.2 percent to $82.33 at 2:03 p.m. Singapore time.


Bloomberg