Bearish conditions in palm oil market set to continue – analyst

06 March 2013 10:42  [Source: ICIS news]

KUALA LUMPUR (ICIS)--“Short-term pain has to be borne for long-term gain,” said Dorab Mistry at the Palm and Lauric Oils Conference and Exhibition Price Outlook (POC) on Wednesday.

Delivering his price outlook for 2013, the director of India-based oleochemical manufacturer Godrej told delegates at the conference in Kuala Lumpur that the bearish market conditions could worsen as a result of greater palm oil supplies.

Mistry estimated Malaysian crude palm oil production in 2013 will be 19.5-19.7m tonnes, while Indonesia’s production could top 30.5m.

As a result, Mistry expects palm oil prices on the Bursa Malaysia Derivatives to slide to Malaysian ringgit (M$) 2,200/tonne ($710/tonne, €543/tonne) in April. This could decline further as a result of increased palm oil output in July and August.

Mistry did not anticipate prices falling below M$1,800/tonne unless Brent crude oil prices dropped below $80/bbl.

The POC is considered a key event in the oleochemical calendar.

Participants discuss future feedstock pricing during the event, and in the weeks after prices tend to follow the sentiment within the market.

As a result, fatty alcohol buyers have opted to stall second-quarter negotiations until after the POC.

Many are now anxiously awaiting developments in the feedstock market before deciding on their strategy.

($1 = M$3.10, €1 = M$4.05)


By: Neha Popat
+44 208 652 3214



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