Palm Oil Internet Seminar

Mapping The Palm Oil Price - 2013 Market Perspective:
Neutral Prices on Slow Stock Drawdown
By: Ms. Erin Fitzpatrick

Erin FitzPatrick is a Commodities Analyst for Rabobank’s Agri Commodity Markets Research (ACMR) team based in London. ACMR is part of Rabobank’s wider Food & Agribusiness Research and Advisory which is comprised of more than 80 analysts around the globe. As a commodities analyst, Erin specifically focuses on analysis and outlook for the world’s major agri commodities. Her role includes price forecasting for key grains & oilseeds commodity markets. In addition, she works closely with Rabobank’s commodity division on servicing client price risk management needs where she has regular interaction with global bank clients. Prior to this, Erin spent three years with Rabobank’s Food & Agribusiness Research and Advisory department in New York where she was responsible for global coverage of the farm inputs sector. In this role she focused on fertilizer, seed, agrochemicals and farm equipment. Before joining Rabobank, Erin spent three years as part of Morgan Stanley’s Wealth Management Group. Erin studied at The University at Buffalo, New York, USA where she earned a B.S. in Management with a concentration in Finance.
As export demand remains strong, we expect stocks to be further drawn down in coming months—supporting MDEX Palm oil prices and reducing the spread to CBOT Soy oil. We believe the January drawdown in Malaysia’s palm oil stocks is a trend that will continue in coming months based on our Q1 2013 price forecast of MYR 2,400/tonne during Q1 2013. In the coming months, the seasonally slow palm oil production, palm oil’s low price, and reduced supplies of alternative vegetable oils should allow prices to rise into Q2 2013. However, we expect the drawdown will not push stocks below the 5-year average, and we maintain our expectations that prices in 2013 will remain lower YOY. Despite this, we expect the reversal in the trend of rising stockpiles will begin to narrow the spread of MDEX Palm oil to CBOT Soy oil, which is at historic levels for this time in the season. We anticipate a recovery in global soy oil export availability as South America’s soybean harvest progresses, at the same time as Malaysia’s palm oil supplies are declining.

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Questions & Answers (5) :
Azharuddin M Amin
11 years ago
Azharuddin M Amin, based on the world bank forecast, CPO prices will below than $ 1,000 per tm, why that happen. Tq
Erin FitzPatrick
11 years ago
Ciruelos, Thank you for your question. Yes I think the spread is already priced in for soy oil vs CPO but do not expect it to go much larger. This current price relationship was driven by diverging fundamentals in soy oil vs palm oil. Palm oil production has been reaching all time highs at the same time global soybean output showed the largest YOY drop on record. We've seen record large palm oil export demand as a result of the high supplies and relatively low price levels. I expect that palm oil production will seasonally decline in coming months at the same time South America soy oil supplies come online. This should somewhat reverse the diverging fundamentals and cause prices to trade more closely. Best, Erin
Erin FitzPatrick
11 years ago
Hi Desmond, The biodiesel margins are for local production (US and EU). Best, Erin
Desmond Ng
11 years ago
Dear Erin, saw an interesting chart on biodiesel margins in US and Europe (page 5 of your presentation). May I know whether the margin is calculated using palm biodiesel or locally produced biodiesel (rape for EU and soy for US)?
11 years ago
Hi Erin, Don't you think that the spread soy oil vs CPO is already priced in ? I mean, CPO has been at a historical discount vs soy oil already for a multimonth period. Consumers who could subsute soy oil by CPO must have already done it. I would argue that for CPO to be able to generate more, new demand (particualrly energy), the spread may still need to go even larger. Pls comment Santiago Ciruelos BASF Germany
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