- 20% crude palm oil
- 25% on crude soybean oil
- 20% on sunflower oil
- 30% on RBD palm oil, said Ashok Sethia, president of the
Crude palm oil (CPO) price is likely to be weaken again with this negative news from India. CPO future price already corrected by 14% from its peak of RM2,620/tonne on 1 Jun 09 to RM2,250 yesterday. We reckon that this correction could have factored in the weaker demand from India after reocrded high edible oil stock. The news of potential reimpose import duty could add downward pressure on price but we are not expecting a severe correction.
Market awaiting for USDA report on 30 Jun 09. In the latest Oil World report, it expect the 30 Jun 09 USDA report on actual plantings will show a considerably higher than intended US soybean area. This would be negtive to edible oil global prices.
Recovery of palm oil production later than expected. Checking with planters review that pick up in production could be delay by 1-2 months. In our early round of checking in Mar 09, we were informed that production would be back to norm by Aug 09. But, now look likely the production will remain weak till Sep 09. The delay in recovery was due to (1) the biological tress stress but already at tail end, and (2) heavy rain in Dec 08-Feb 09 lead to poor polarization reulting in less/poor fresh fruit bunch production . For Jan-May 09, total CPO production is down 3.8% yoy or -258,588 tonnes.
Less availability of soyoil producing countries coverting more into biodiesel. Production of biodiesel in Argentina and Brazil has increased. This translate into a less availability of soyoil for global market. Brazil and Argentina produce 42% of the global soybean and 68.4% of total soyoil exports.
We maintain OVERWEIGHT on Indonesian and Singapore palm oil stocks and UNDERWEIGHT on Malaysian palm oil stocks. Picks: Golden Agri, Indofood Agri and Astra Agro Lestari.
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