Sunday, March 14, 2010

Palm Oil News Roundup - Sun 14 March 2010

Palm Oil Price News

The price of palm oil looks to continue rising as analysts and news outlets report catalysts that will have a downside impact on the supply of the commodity.

The El Nino weather phenomenon may result in drier-than-usual weather which may in turn curb output in Malaysia and yields in Indonesia. The resulting supply crunch could drive prices to as much as 3,300 ringgit ($988) a metric ton, said Anne Frick, vice president for research at the New York-based commodities and financial derivatives broker Prudential Bache Commodities LLC. Malaysian output may not meet demand for local use and exports, Frick said in an interview.

Publisher of Hamburg-based "Oil World" magazine Thomas Mielke painted a nullish outlook for Palm Oil saying that Malaysia's crude palm oil will enjoy bullish prices this year with the golden crop breaching pass the RM3,000 per tonne level if production and stocks deplete.

Mielke warned that at the moment is that we are living with very tight stocks, and that if anything went wrong on the production side, the situation could turn critical and prices could surpass RM3,000 per tonne.

This report was corroborated by a Bloomberg BusinessWeek report that Palm oil production in Malaysia, the world’s second-largest grower, slumped to the lowest level in almost three years in February, draining stockpiles amid concerns that dry weather will limit supplies this year.

Biofuels News

Meanwhile, the use of palm oil as a biofuel has received a positive news that Neste Oil is growing palm oil for use in its biofuels refineries . The Biofuels company could buy 2.4 million to 2.5 million tonnes of vegetable oils for four biofuel plants, putting the Finnish refiner on par with consumer goods giant Unilever as a top vegetable oil buyer. The bulk of Neste Oil's vegetable oil purchases will come from palm oil, currently the cheapest in the world.

Industry News

Felda Vegetable Oil Products Sdn Bhd Chief Executive Officer Ismail Hasan has been reported as saying that Malaysian palm oil refineries should venture into more downstream value-added products to remain profitable. This means producing and exporting more value-added products to help increase margins for refineries, such as margerine, soaps and cosmetics.

Because the price of refined products do not move in tandem with the price of palm oil, this has put a strain on the profitability of refineries which have to absorb the higher cost of the heightened price of palm oil.

In other news, Tan Sri Dr Yusof Basiron, the Chief Executive Officer of the Malaysian Palm Oil Council (MPOC), says that Malaysia’s palm oil has attained a high level branding internationally, because of its status as a top quality edible oil and also due to Malaysia's reliability in supplying to a global market that continues to face a severe shortage of oil and fats, a top industry official said.

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