Monthly Prices Movement

  • Palm Oil prices witnessed a steady trend in major markets of the country throughout the month due to strong demand from buyers as festival season purchases are at its peak.

  • Low inventory data from major producing regions and also supported the prices. India's move to cut import tax on Palm Oil will support price of the commodity and drive the demand.

Ground Report

  • India's import of RBD Palmolein shot up by 74.7% during the first ten months of the current Oil year and reached at 2.196 million tons and is expected to increase further in the coming months.

  • India's imports of Refined Edible Oil likely to double to set a new record in the current oil year (Nov '15-Oct '16) due to better realization than import of CPO.

  • India's domestic refining industry is facing severe crisis of under utilization of capacity and is on the verge of closure due to the increase in import of RBD Palmolein. The import is high because the landed cost of RBD olein (finished product) is same as that of Crude Palm Oil (raw material).

  • SEA stated that India imported 0.75 million tonnes of Palm Oil (CPO+RBD) in August against 0.57 million tonne in July, up by 32%.

  • According to Bloomberg survey, India's total Vegetable Oil imports down by 1.4 percent to 1.36 million tons in August.

  • Production of Palm Oil in Malaysia during August marked an increase of 7.3 percent from July to 1.70 million tonnes, but its the lowest August levels since 2012.

  • Malaysia's Palm-Oil exports during the September 1-25 period are estimated to have fallen 15.6% from the previous month to 1,112,058 metric tons, cargo surveyor Intertek Agri Services informed and India's imports of Palm Oil declined by 34.46% to 298850 metric tonnes during the period.

  • Malaysia's Palm Oil stocks at end-August plunged by 17.3% to 1.46 million metric tons, from 1.77 million metric tons at the end of July, as per Malaysian Palm Oil Board (MPOB).

  • Indonesian Palm Oil production probably rose 1.4 percent to 2.82 million tons in August from a month earlier, while inventories increased 1.1 percent to 1.9 million tons.

  • Indonesia's Palm Oil shipment increased 20% to 1.92 million metric tons last month from 1.596 million tons in July which is the steepest increase since October 2014, according to Indonesian Palm Oil Association. China's high imports to meet rising demand during festivals have lead to the rise in imports.

  • The mid-Autumn festival in China and Diwali celebrations in India is expected to draw down inventories in Indonesia and Malaysia, which together account for 86% of the global supplies.

  • Malaysian inventories are already at the lowest in more than five years in August and output is also expected to drop 10% this year on El Nino weather phenomenon.

Policies

  • India slashed the import duty on Crude Palm Oil to 7.5 percent from 12.5 percent, and duty on Refined Palm Oil to 15 percent from 20 percent.

  • Indonesia set CPO export tax at $3 per tonne for October, up from zero in September, as the government reference price is seen at $781.49 per tonne. Government imposes tax for CPO exports when the reference price rises above $750 per tonne.

  • Malaysia, world's second largest Palm Oil producer, hiked Crude Palm Oil export tax to 6.5 percent for October month against 5 percent in September, informed the Malaysia Palm Oil Board. Malaysia last raised the tax in July from 5.5 percent in June.

  • Malaysia is considering the Oil Palm sector's tax policy suggestions, which include double deduction for companies, which promote industry sustainability.

  • Indonesia's government plans to issue a five-year moratorium on new concessions to convert primary natural forests and peat land to Palm Oil plantations in a bid to preserve the country's sustainable environment, particularly after global criticism of out-of-control forest fires.

Global

  • Global Palm Oil production likely to recover in 2017, increasing by 4 million tonnes in the first half of next year from the same time in 2016, said leading industry analyst in Globoil conference 2016 in Goa, India.

  • Global Palm Oil production was impacted this year by the El Nino, a warming of the Eastern Pacific Ocean waters which brings dry weather across South-East Asia and lowers Palm yields in top producers Indonesia and Malaysia.

  • China's Palm Oil imports are lowered to 5 million metric tons (MMT) for MY15/16 by USDA due to resumption of export duty in exporting countries, weak demand for Palm Oil, adequate supply of other Vegetable Oils and depreciation of the Chinese currency.

  • Palm Oil imports of China were 3.8 MMT in the first ten months of MY15/16, significantly down from the 4.6 MMT in the previous year, as per USDA. Domestic Palm Oil stocks are estimated at less than half of the average level in the past five years.

  • China's Palm Oil imports from Malaysia during September 1-20 fell by 6.09% to 175700 metric tonnes, according to cargo surveyor Intertek Testing Services.

  • The biggest importing countries like India and China have bought enough Palm Oil from Malaysia in August to meet immediate demand.

Outlook

  • Prices of Palm Oil is likely to continue the uptrend due to strong demand from buyers as festival season purchases are at its peak. Outlook for Palm Oil is seen positive for the month but sentiment is cautious on rising global supply of Edible Oil.

  • The demand for Palm Oil in major consuming countries may come down after the end of festival season by November.

  • The lower stockpile reports in major Palm Oil producing regions, Malaysia and Indonesia is likely to boost demand and support the prices. Palm Oil production has entered in peak production period raising hopes for stockpile to rise in coming months.

  • With the recent reduction on India's import duty on Palm Oil, demand is likely to increase and is expected to make Palm Oil more competitive against other Edible Oils in India. This will also continue to support price of the commodity ahead of its peak output season.

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