In The News - 26/09/2005
The
world must brace for firmer edible oil prices in the new oil year starting in
November, with growth in demand exceeding production and greater use in by
biodiesel makers, industry analyst Dorab Mistry said on Sunday.
Prices
of both palm and soy oils will firm up in the coming months, with demand for
biodiesel alone grabbing at least six million tonnes of oils despite the slower
growth of the economy, said Mistry, whose price projections are watched closely.
"I
feel compelled to raise my price range for BMD CPO futures from my earlier
prediction of 1,300-1,500 ringgit to a new higher range of 1,400 to 1,600,"
Mistry told an edible oil conference.
"As
the period October to February advances, prices will creep towards the upper end
of this range," he added.
Crude
degummed soya oil would be in the range of $460-500 per tonne free on board,
while RBD palm olein will be in the $400-450 band and crude palm oil will be
between $370-420 free on board, Mistry said.
These
prices would keep vegetable oil prices competititve for expanding their use into
biodiesel, and curb uncontrolled usage.
"Gradually,
12 months later, and depending on how mineral oil prices perform, vegetable oil
prices may have to rise further to curb demand and increase supply," said
Mistry, director of London-based Godrej International Ltd.
If
palm oil prices hover at around 1,500-1,600 ringgit a tonne, palm oil
plantations would prosper and acreage would expand sharply in Indonesia, he
said.
Malaysia
and Indonesia are the world's largest producers and exporters of palm oil, while
Brazil and Argentina are among the top soy oil producers.
From
mid-2006, the use of soy oil for biodiesel will have a pronounced impact on
prices, and the total biodiesel capacity coming on stream by the end of
2006/07 will require 1.6 million tonnes of soya oil, Mistry said.
Edible
oil imports by India, the world's leading buyer, in 2005/06 could remain flat at
around 5.65 million tonnes, but imports of soy oil will go up at the expense of
palm oil.
In
the current oil year, the Indian market has been over-supplied because of soya
and palm oil shipped by major players for the purpose of stocks and sale, he
said.
"I
expect, for the full oil year 2004-05, imports will be 5.65 million tonnes,
comprising 2 million tonnes of soya, 3.55 million tonnes of palm and 100,000
tonnes laurics," Mistry said.
The
palm figure would include 250,000 tonnes of hydrogenated fats or vanaspati, he
said.
India's
imports for 2005-06 will remain at the level of the current year, Mistry said.
"Soya
imports will continue to rise to 2.2 to 2.4 million tonnes, with palm taking up
the rest," he said.
Pakistan
hopes to more than double its imports of crude palm oil to 800,000 tonnes by the
end of calendar year 2006 with the setting up of new refineries to process
crude, a top industry official said on Sunday.
"The
volume of edible oil imports next year will be the same 1.5 million tonnes as in
the current year but there will be a shift in the commodity," Rasheed
Janmohammed, director of the country's leading edible oil importers Westbury
Group, told Reuters in an interview.
He
said Pakistan imports about 1.3 million tonnes of palm products and 200,000
tonnes of soft oils. Out of the total palm products imports, RBD palm olein
constitutes one million and the remaining is crude palm oil.
Nearly
60 percent of Pakistan's crude palm oil is sourced from Malaysia while the rest
comes from Indonesia.
The
country annually consumes 2.5 million tonnes of edible oils. It produces about
600,000 tonnes of cottonseed oil and imports 0.5 million tonnes of rapeseed from
Canada, Australia and Europe for processing.
He
said if everything went according to schedule, Pakistan will have fresh capacity
to process 300,000 tonnes of crude in the first quarter of next year and more
would come up later.
"With
the setting up of more refineries, we will be going for value addition through
refining and by 2007, I foresee Pakistan importing one million tonnes of crude
palm oil," Janmohammed said
He
said there was a difference of $35 per tonne between the price of crude palm oil
and palm olein and the country could save upto $35 million annually if it
switched over to CPO imports.
Janmohammed
said Pakistan was also putting up a refinery at a port near Karachi to process
CPO and other facilities were also coming up.
He
said the country was keen to expand its oilseed production but there were
constraints on land.
"Pakistan's
climate is suitable for sunflower seed cultivation but the priority is
production of grain and sugar and as such not much spare land is available for
oilseeds cultivation," Janmohammed said.
He
said Pakistan hoped to buy more soymeal this year from its neighbour India but
did not give any figures.
Malaysian
palm oil prices are expected to trade at around 1,400 to 1,600 ringgit per tonne
until February, industry analyst Dorab Mistry told an edible oils conference on
Sunday.
"I
feel compelled to raise my price range for BMD CPO futures from my earlier
prediction of 1,300 to 1,500 to a new higher range of 1,400 to 1,600,"
Mistry, a respected industry analyst, said.
"As
the period October to February advances, prices will creep towards the upper end
of this range." Crude degummed soyoil would be $460-500 FOB, he said.
Chicago
Board of Trade soybean futures slipped on Friday following the moves in soyoil
and the volatile energy markets which weakened as Hurricane Rita was downgraded
to a Category 3 storm, traders said.
CBOT
soybean oil tracked the crude oil and gasoline markets all week amid rising
demand for biodiesel. About 90 percent of U.S. diesel is produced from soybean
oil.
The
energies are down, so the oil is reacting back negatively," said Dan
Cekander, analyst with Fimat Futures.
November
soy <SX5> closed 6-1/2 cents lower at $5.74 per bushel, with the deferreds
down 5 to 6-3/4 cents.
October
soyoil <BOV5> settled 0.44 cent weaker at 22.88 cents per lb, with the
back months down 0.13 to 0.41 cent.
Energy
markets in London and the United States started off weaker Friday as Hurricane
Rita lost some intensity and hopes built that Texas refineries would escape
catastrophic damage, a setback from this week's earlier moves.
Both
the energy and soy-complex markets fell to the day's lows late when Rita was
downgraded to Category 3. Crude oil futures dived, with the November contract
<CLX5> closing $2.31 lower at $64.91.
"The
selling started in oil, then moved to beans," said one CBOT floor broker.
Rita
was expected to hit the coasts of southwestern Louisiana and upper Texas early
Saturday.
Pressure
also stemmed from some pre-weekend harvest pressure. Underpinning the market was
ongoing Chinese soy business.
Midwest
soybean basis bids were steady to weak on harvest pressure early Friday, dealers
said.
But
harvest may slow up over the next several days as rains were expected to move
through the Midwest, Meteorlogix weather on Friday.
Soymeal
futures fell, giving in to the weakness of soybeans and soyoil. Meal gained on
soyoil, a reverse from this week's trend, as the market was due for a technical
bounce. Soft U.S. cash soymeal markets loom over prices.
October
soymeal <SMV5> closed 80 cents down at $171.30 per ton, with deferreds
down 30 to 90 cents.
Export
activity overnight included Israel's purchase of 7,000 tonnes of U.S. soymeal.
Malaysian
palm oil futures closed weak overnight. Traders in Kuala Lumpur said players
were positioning ahead of the release of key export data due next week.
Funds
sold 3,000 soy futures, 3,500 soyoil lots and were about even in soymeal,
traders estimated.
Volume
was light. In soybeans, an estimated 38,451 futures and 11,730 options traded.
Soymeal trade was pegged at 24,477 futures and 2,216 options. Soyoil volume was
seen at 22,140 futures and 5,369 options.
(Note:
all prices in Canadian dollars unless noted.)
Winnipeg
Commodity Exchange
canola futures ended mainly lower on Friday on late commercial selling and
spillover weakness from U.S. soy
futures, traders said.
But the market had been firm for most of the session on persistent exporter buying, which some traders said could be linked to new business or to lifting of hedges.
"There's a lot of buying in here in the midst of harvest, and very good farmer selling as well," a canola trader said.
Canola settled $3.20 per tonne lower to 80 cents higher, with November <RSX5> down $1.10 at $260.10 and January <RSF6> down $1.00 at $268.50.
Canola volumes were estimated at 5,722 contracts, up from a total of 5,039 on Thursday.
The market opened higher despite early weakness in Chicago Board of Trade soybean and soybean oil futures, traders said.
But European rapeseed prices have been strong on demand for biodiesel, which some traders said may have led to firmer canola values.
Crushers
were also seen as buyers.
Farmer
hedges kept gains in check.
"The weather's looking good. The hedges should be pouring in shortly," a canola trader said.
Environment Canada forecast rain for Saskatchewan and Manitoba on Friday, followed by three days of clear weather before rains and cool temperatures move across the Prairies on Tuesday.
An estimated 991 November/January spread traded between $8.50 and $8.90, with 141 November/March between $16.00 and $16.40.
Speculative and commercial buying supported barley futures, but late hedges reined in gains, traders said.
October barley <ABV5> ended 50 cents per tonne lower at $114.50 with December <ABZ5> up 40 cents at $119.90.
($1=$1.17
Canadian)
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