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*COVID-19 AND LOCKDOWNS: INDIA COULD SOON RETURN TO MALAYSIA FOR PALM OIL - Bernama*
05-May-2020 03:39:03 PM

KUALA LUMPUR, May 5 (Bernama) -- India is seen as having very little choice and could soon turn to Malaysia and start importing back, especially if the COVID-19 pandemic situation in Indonesia gets worse and the country goes into full lockdown as most of the countries are doing at the very moment.
“The country (India) could step up purchases in the coming months as shipments are reportedly easing up,” the Malaysian Palm Oil Council (MPOC) said in its second quarter outlook for palm oil in the South Asian countries.
However, the current lockdown conditions will be the determining factor as to whether the required import volumes can be achieved or continue to add to the current woes, it said.
In India, total imports of oils and fats are projected at 1.0 to 1.2 million metric tonnes (MT) on a monthly basis, in which palm oil’s share will be at 50 per cent, it said.
MPOC said the Saurashtra Oil Mills Association (SOMA), the largest organisation of groundnut oil millers, has also urged the Indian government to remove the restrictions on refined palm oil import to meet the huge shortfall in the domestic edible oil market owing to the lockdown.
“It added that the country could expect a spike in the domestic prices of edible oils in the coming month if there is no relaxation in the palm oil imports into the country,” it said.
Malaysia is currently going through a partial lockdown but the palm oil industry can continue to operate due to the importance of palm oil to the country’s economy. The plantation sector has been allowed to resume their operations alongside the refineries and cooking oil producers.
Nevertheless, the outlook said Malaysia cannot expect to achieve the same market share in the palm oil import basket under the current situation as compared with a 45 per cent market share last year.
A reasonable expectation for Malaysian Palm Oil’s (MPO) share would be about 25 per cent, which is closer to the share as in 2018, it indicated.

PAKISTAN

As for Pakistan, it is anticipated that oils and fats imports will maintain their current momentum and exceed the total volume of 1.6 million MT by the end of June 2020.
Pakistan is a net importer of oils and fats with 90 per cent of the total requirement met by imports. This is the main reason that Pakistan’s imports are maintaining their existing volumes, despite the ongoing pandemic and restrictions.
At the end of the first quarter of 2020, total imports of edible oil in Pakistan registered a decline of only 1.2 per cent when compared with the same period of last year. During the same period, the local stocks in Pakistan registered a decline of 9.5 per cent, which compensated for the lower arrivals.
The arrivals of edible oil are also likely to strengthen in the months of May and June to capitalise on the two per cent duty relief which the government of Pakistan has announced on the import of edible oil for a period of three months, ending on June 30, 2020.
“It is also pertinent to note that palm oil and its major fractions contribute more than 95 per cent of the total imports of oils and fats in Pakistan,” said MPOC.
MPO’s market share is currently at 27 per cent and it is likely that Malaysia will continue to maintain this level of share and reach the total export volume of 450,000 MT by the end of June 2020.
This is based on the assumption that the current disruption in Sabah plantations will not affect the overall supply situation from Malaysia.

BANGLADESH

The council said preliminary data from the local source shows that imports of palm oil on April 1-20, 2020 have declined to 88,271 MT from 130,746 MT during the same period a year ago.
Imports of crude degummed soybean oil however have increased to 92,300 MT during 1-20 April, 2020, as opposed to 76,350 MT during the same period last year, owing to the competitive prices.
Imports of rapeseed/canola registered 19,748 MT in the first 20 days of April 2020 as compared with zero imports recorded during th
e same time span last year, it said.
It is expected that palm oil consumption will continue to be affected in anticipation that the impact of the COVID-19 pandemic could prolong until the end of the second half of 2020.
“Hence, we could see a further reduction in the import of palm oil in the second quarter of 2020. A higher quantum of decline can be expected since palm oil has a larger share in the Bangladeshi edible oils market.”
Based on MPOC Dhaka market intelligence data, consumption of palm oil during the Ramadan 2020 period is expected to go down by 62 per cent to approximately 97,000 MT, a steep decline from 255,000 MT that was recorded during the month of Ramadan in 2019, said MPOC.
This includes reductions in the household consumption, shortening/Vanaspati industries, food processing industries, hotels and restaurants including fast food chains as well as street vendors.

KEY EXPORT DESTINATIONS

The South Asian countries are important export destinations for Malaysian palm oil. At the end of 2019, MPO exports to this region registered an unprecedented record of 5.75 million MT, an increase of 36.3 per cent from what had been achieved in 2018.
The feat was largely attributed to the significant increase in MPO exports to India which were recorded at 4.41 million MT due to an import duty advantage, accounting for almost 77 per cent of the total MPO exports into this region.
The scenario has since changed for the first quarter of 2020 (Q1 2020). Data by the Malaysian Palm Oil Board (MPOB) shows that for the period of January-March 2020, MPO exports to this region have gone down by 957,994 MT or 66.9 per cent as compared with the same period a year ago.
The staggering drop in MPO exports to India has contributed to the overall decline in the total exports into this region. Following a trade spat between India and Malaysia in 2019, a restriction has been imposed on the importation of refined palm oil into India.
The restriction has greatly caused a major blow to exports of palm oil from Malaysia to this country.
Due to the fact that the Indonesian suppliers have been fulfilling the added demand coming from India since the beginning of 2020, MPO has been gaining share in markets like Pakistan and Bangladesh.
Palm oil imports from Malaysia have increased due to the fact that Malaysian suppliers are able to offer competitive prices to the local buyers.
Malaysia crude palm oil output to dip 1% in 2020- state agency - Reuters News

-Malaysia crude palm oil out to fall 1% from 2019 -MPOC
-Malaysia end-2020 palm oil stocks likely at 1.9 mln tonnes -MPOC

KUALA LUMPUR, May 8 (Reuters) - Crude palm oil output in Malaysia, the world's second-biggest producer, will drop in 2020 by 1% from a year earlier because of drier weather last year limiting yields and the country's lockdowns this year to prevent the spread of the coronavirus.

Output this year is expected to drop to 19.7 million tonnes from a year earlier, state agency and industry body the Malaysian Palm Oil Council (MPOC) said.

"This is based on the impact of low fertilizer application in 2019, dry weather in the middle of 2019 which is resulting in diminished oil palm fruit yields and also a brief suspension of Sabah oil palm estates and mills due to COVID-19 pandemic," MPOC wrote on its website, referring to the respiratory disease caused by the novel coronavirus.

Sabah, Malaysia's largest palm oil producing state, temporarily shuttered some plantations and mills during a six-week partial lockdown that started in March to contain the coronavirus outbreak. (Full Story)

MPOC said the partial lockdown also interrupted harvesting, milling and created a manpower shortage and logistics issues that will also dent palm oil production.

According to data from the Malaysian Palm Oil Board, fresh fruit bunch yields in the first quarter of 2020 fell 21% to 3.37 tonnes per hectare (1.36 tonnes per acre), compared to 4.28 tonnes per hectare in 2019.

The MPOC forecast Malaysian palm oil stockpiles at the end of 2020 to dip to 1.9 million tonnes from 2 million tonnes last year.

A lower inventory might support palm oil prices which have plunged 37% from the start of the year to trade at 1,997 ringgit ($464.31) per tonne on Friday.

MPOC's Chief Executive Kalyana Sundram told Reuters on Tuesday that global demand for the world's most widely-used vegetable oil may have bottomed out after being hammered by the pandemic and is now set for a slow recovery.
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🇺🇸 The S&P 500 rallied to a 2-1/4 month high and closed sharply higher on optimism about promising early results from a coronavirus vaccine from Moderna that could allow the global economy to recover more quickly than expected, and strength in energy stocks after WTI crude oil rallied more than +7% to a 2-month high.
* Dow 24,597 (+911/ +3.8%)
* S&P 2,953 (+90/+3.1%)
* Nasdaq 9,234 (+220/+2.4%)

🇺🇸 Drugmaker Moderna Inc surged 19.96% after the company said its experimental Covid-19 vaccine showed promising results in a small early-stage trial.

🇺🇸 Fed Chair Powell said the Fed will use its "full range of tools" to support the economy.

€ European stocks closed 4% higher as investor confidence rose with lockdown restrictions around the world being lifted.

⛽️ Oil prices on Monday jumped to their highest in over two months on positive early results on a potential coronavirus vaccine, optimism about a resumption in economic activity and signs producers were following through on planned output reductions.
* Crude oil $31.82 (+2.39/+8.1%)
* Brent crude $34.81 (+2.31/+7.1%)

🇨🇳 Shanghai Composite closed up +0.24% Chinese stocks and industrial metals prices rose after China's State Council announced guidelines to revive large infrastructure projects. 

🇨🇳 The Chinese yuan fell to a 6-week low of 7.1195 yuan/USD after the PBOC set its daily yuan fixing at 7.1030 yuan USD/, above Friday's level of 7.0936 yuan/USD. 

🇨🇳 China Apr new home prices rose +0.42% m/m, the biggest increase in 6 months, and home prices gained in 50 cities in Apr compared with 38 cities in Mar.

🇯🇵 Nikkei Stock Index closed up +0.48% after Japan Q1 GDP fell -3.4% (q/q annualized), stronger than expectations of -4.5%.

👑 Gold retreated from a more than seven-year high, as stocks and oil surged on optimism surrounding the trial of a potential COVID-19 vaccine. U.S. gold futures settled 1.3% lower at $1,734.40.

🌴FCPO (RM2,142, +53) rallied nearly 3% on Monday, helped by Indonesia's plan to maintain an ambitious biodiesel programme and signs of growing demand on the back of more countries easing coronavirus restrictions. Indonesia is set to distribute $2.78 trillion rupiah ($187 million) for its B30 biodiesel programme and increase its palm oil export levy by $5 per tonne starting this month. This is good news for Malaysian export as Indonesian export prices will be higher than Malaysia in June, by US$ 10-15 depending on exchange rates. Malaysia's May 1-15 palm oil export shows a steady increase as the palm oil prices are attracting fresh demand due to lucrative levels and ease in coronavirus-related lockdown in some countries. Malaysia's palm oil exports in May 1-15 rose between 6% and 7% from the previous month, cargo surveyors said on Friday.
Indonesia sets nearly $190 mln subsidy for biodiesel program, raises palm export levy - Reuters News
18-May-2020 04:31:37 PM

JAKARTA, May 18 (Reuters) - Indonesia is set to distribute $2.78 trillion rupiah ($187 million) for its ambitious B30 biodiesel programme and increase its palm oil export levy by $5 per tonne, finance minister Sri Mulyani said on Monday.

"We need 3.54 trillion rupiah to maintain B30," Mulyani said in a virtual media briefing, referring to the country's biodiesel mandate which has 30% palm-based bio-content.

"760 billion rupiah will be funded by businesses through a $5 per tonne increase in the export levy, and by the government through the state budget," she said, adding that the government will contribute 2.78 triilion rupiah.

Febrio Kacaribu, head of the Finance Ministry's Fiscal Policy Office, said last week that the Estate Crop Fund that collects the palm export levy does not have enough funds to subsidise the program until the end of the year. (Full Story)

The fund subsidises the cost difference between fuel made from palm oil and diesel fuel as incentives for producers.

Indonesia, as the world's top palm oil exporter, is seeking to boost domestic consumption of it while cutting imports of diesel.

However, a sharp fall in crude oil prices has widened the price difference between the two and increased the bill for the subsidy.

Indrawati said the increased levy will start this month while the subsidy for the state budget will only be available for 2020.

Indonesia currently collects an export levy of up to $50 per tonne when palm prices are above $619 per tonne.

($1 = 14,875.0000 rupiah)
EXCLUSIVE-India resumes purchases of Malaysian palm oil – traders
Reuters News

19-May-2020 02:56:47 PM
By Rajendra Jadhav and Naveen Thukral

Around 200,000 T of Malaysian crude palm oil bought last week
Lower port stocks, discounted prices prompt Indian buying

MUMBAI/SINGAPORE, May 19 (Reuters) - Indian buyers have resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row, with buying spurred by a fall in domestic inventories and discounted prices, trade sources said.

The renewed purchases come amid improving trade relations between the two countries after the formation of a new government in Kuala Lumpur, with Malaysia signing a deal last week to buy a record 100,000 tonnes of Indian rice. (Full Story)

Leading Indian importers last week contracted up to 200,000 tonnes of crude palm oil from Malaysia, the world's No.2 producer after Indonesia, to be shipped in June and July, the sources told Reuters.

"Port stocks have dropped sharply in India because of lower imports," said a Singapore-based trader who sells Malaysian and Indonesian palm oil.

Ship-tracking data compiled by Refinitiv showed that India's total palm oil imports for the first four months of 2020 FELL by more than 50% from the same period in 2019 to 1.11 million tonnes.

A restart to buying by India, the world's biggest edible oil importer, could further support Malaysian palm oil prices FCPOc3, which have edged up from 10-month lows in recent days.

India early this year restricted imports of Malaysian palm oil after then Prime Minister Mahathir Mohamad criticised policies by New Delhi affecting the country's Muslim minority. (Full Story)

The renewed buying has been spurred by low stocks, while India's relations with Malaysia have been improving since a new government was formed in early March, said an Indian edible oil refiner who contracted "a few vessels" for June shipment.

"I think the Indian government will allow unloading of upcoming shipments. We can't rely on one seller (Indonesia) indefinitely, especially when you have to build inventory," the buyer said.

India's commerce ministry did not immediately respond to a request for comment on Tuesday.

ATTRACTIVE DISCOUNT

Malaysian palm oil is now available at a $15 discount to supplies from Indonesia which on Monday raised its palm oil export levy by $5 per tonne, said a Mumbai-based dealer with a global trading firm. (Full Story)

Indian purchases of palm oil from Malaysia could rise further if discounts remain, he said.

Malaysian buyers are eager to sell even at a discount as stocks are rising and production is expected to improve in June, said a second Indian edible oil refiner, who bought Malaysian palm oil.

Malaysia's palm oil inventories jumped to more than 2 million tonnes in April, well above expectations, as production surged to a six-month high and coronavirus lockdowns led to a slump in demand. (Full Story)

India buys more than 9 million tonnes of palm oil a year, accounting for nearly two-thirds of its total edible oil imports, and took a record 4.4 million tonnes of Malaysian palm oil in 2019.

"Indonesia's export tax is allowing Malaysian sellers to offer a discount. It is tempting for Indian buyers," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Photo from Aslam Хизир
🇲🇾 Malaysia is planning to restart the nationwide rollout of the B20 biodiesel blend mandate in September after postponing the program for two months due to lockdown measures to control the coronavirus outbreak. The move to a nationwide B20 blend is still expected to be complete by mid-June 2021.

🇮🇳 India has reportedly resumed buying Malaysian palm oil after a four-month stoppage, which was spurred by political disagreements between the two countries. Relations between the two have improved since Malaysia’s new government took office several months ago. It is believed Indian refiners bought around 200k tonnes of crude palm oil from Malaysia last week. The recent institution of a $5/tonne export tax on Indonesian palm oil to support their biodiesel blending initiatives leaves Malaysian oil at about a $15/tonne discount currently.
Current CPO prices
Market is Bullish, time to buy
🌴The Malaysian Palm Oil Board sees crude palm oil prices potentially rising to 2,300-2,400 ringgit/tonne ($528.37-$551.34) in the months ahead on improved export demand prospects as the relationship with India has improved. At the end of last week, benchmark August palm oil futures finished at 2,167 ringgit/tonne (~$497), but rallied sharply overnight after being closed since Friday, to finish at 2,281 ringgit/tonne ($524). Malaysian palm oil production for the May 1-25 period was estimated down 6% from a month ago, while exports during the same period are seen up 5-10% from a month earlier. Previously, the Malaysian Palm Oil Association said they expected May palm oil production to rise nearly 12% from April.
Current CPO prices
market is bullish👍
Current CPO prices↗️