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2016 Market Direction - Twists and Turns of Palm Oil Prices:
Palm Oil Price Trends in Time of Low Energy Prices
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Volatility in veg oil markets continue to be driven by not just supply-demand dynamics but also interrelated with the currency and energy markets given their dominance in deciding the export-import competitiveness and Veg oil offtake in alternate fuels like biodiesel. at this juncture, looking at the veg oil markets, supply is growing Y-o-Y basis with good oilseed crops across the globe whereas efforts are directed towards sucking out the surplus oil by promoting usage of biodiesel made out of Veg oils viz. palm, Soy, rape & others.
Going in to the details, On the soy front, Currency devaluation in Brazil & Argentina against the strengthening dollar has improved the export competitiveness of commodities and the share of US soybean exports in the global market is seen dwindling due to major importers shifting to South America, thus resulting in stock build up at US as we move forward in to 2016. With china already shifting their preference to South America in the OND’15 quarter, jan’16 ending stocks in US have remained higher by about 8.5 million ton vis-à-vis corresponding period of the previous year. While the market grapple with higher stocks at US & South America as on today, soy markets are heading in to another harvest in South America from Mar-April’16 and the same could bring additional pressure on to soy complex in the coming 1-2 months.
On the biodiesel front, weakness in crude oil prices due to prevailing supply glut from major producers has affected the blending economics (a negative margin of $ 400 per ton in soy & palm) which could potentially keep biodiesel production in Indonesia, EU & US on a subdued note, thus resulting in higher stocks at major palm & soy regions Y-o-Y basis
While Chinese economy continue to show weakness and consistent devaluation of Yuan hinting at slowing demand, macro-economic concerns continue to rule markets in the medium term. However, US Fed unlikely to go for another interest rate hike in March might lead to appreciation in emerging market currencies as we move in to next 2-3 months
On the palm front, palm prices rallied in the last few months driven by dryness in the first half of 2015 and also on the optimism over biodiesel blending in Indonesia aided by the Indonesian crop estate fund to subsidize the biodiesel industry. On the other hand, Supply squeeze during the period of Nov-Mar has helped to keep the momentum intact. However, with the recent rise in palm prices, spreads with the rival oils like soy oil have been coming down with forward FOB spread (Argentina Soy-Malaysian CPO) already trading at around $ 30 per ton, any further price rise in palm could potentially result in further narrowing of the spread which could push destinations like India to shift to Soy. With palm production likely to revive from May-June ’16 months, stock build up is also likely to push the palm prices down in the coming 1-2 months.
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2016 Market Direction - Twists and Turns of Palm Oil Prices |
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Archives |
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MITIGATING THE NEXT WAVE OF MARKET UNCERTAINTIES Nov 14, '22 ~ Nov 18, '22 |
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ASSESSING 2022: MANAGING OPPORTUNITIES AND RISKS Mar 28, '22 ~ Apr 01, '22 |
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Section 2: Opportunities for Palm Oil in Asian Market Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Oils & Fats Supply, Demand and Outlook Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Price Direction Apr 05, '21 ~ Apr 11, '21 |
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Section 2 : Special Focus on the US Apr 05, '21 ~ Apr 11, '21 |
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POINTERS ON THE PRICE TRENDS Jun 22, '20 ~ Jun 28, '20 |
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Section 1 : CPO Price Trend Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Global Palm Oil Market Opportunities Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Special Focus Aug 19, '19 ~ Aug 25, '19 |
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Section 1 : CPO Price Trend Aug 19, '19 ~ Aug 25, '19 |
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Special Focus - India Feb 25, '19 ~ Feb 24, '19 |
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Section 1: CPO Price Trend Feb 18, '19 ~ Feb 24, '19 |
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Section 2: Global Palm Oil Market Focus Aug 06, '18 ~ Aug 12, '18 |
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Section 1: CPO Price Trend Aug 06, '18 ~ Aug 12, '18 |
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Section 2 : Global Palm Oil Market Focus Jan 29, '18 ~ Feb 04, '18 |
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Section 1: CPO Price Trend Jan 29, '18 ~ Feb 04, '18 |
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Section 2: Regional Focus : CIS Countries Aug 21, '17 ~ Aug 27, '17 |
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Section 1: Palm Oil Price Fundamentals Aug 21, '17 ~ Aug 27, '17 |
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Section 2: Market Challenges and Opportunities Feb 20, '17 ~ Feb 26, '17 |
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Section 1: Price Directions Feb 20, '17 ~ Feb 26, '17 |
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Section 1 : Palm Oil Price Fundamentals Aug 22, '16 ~ Aug 28, '16 |
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Section 2 : Trade Issues and Market Prospects Aug 22, '16 ~ Aug 28, '16 |
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2016 Market Direction - Twists and Turns of Palm Oil Prices Feb 22, '16 ~ Feb 29, '16 |
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Second Half 2015 - Anticipating Market Price Direction Aug 17, '15 ~ Aug 23, '15 |
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Special Focus: Indian Sub-Continent Aug 17, '15 ~ Aug 23, '15 |
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Opportunities, Challenges And Trend In 2015 CPO Price Feb 23, '15 ~ Mar 01, '15 |
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2nd Half 2014: Market Challenges, Predictions And Directions Aug 25, '14 ~ Aug 31, '14 |
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Anticipating 2014 Palm Oil Price Direction Feb 17, '14 ~ Feb 24, '14 |
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Prospects For Second Half Of 2013 - Managing Price Fluctuations Jul 22, '13 ~ Jul 29, '13 |
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Mapping The Palm Oil Price - 2013 Market Perspective Feb 18, '13 ~ Feb 27, '13 |
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Palm Oil : Challenges, Opportunities And Latest Market Directions Aug 06, '12 ~ Aug 17, '12 |
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2012 Price Direction, Issues & Challenges Feb 13, '12 ~ Feb 20, '12 |
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Challenges, Opportunities And Latest Price Trend Aug 08, '11 ~ Aug 16, '11 |
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Challenges, Opportunities And Price Direction Feb 07, '11 ~ Feb 17, '11 |
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2010 Year End Prospects - What Lies Ahead? Aug 02, '10 ~ Aug 08, '10 |
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