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Asia Biofuels Update: Malaysian Palm Oil Slips on Profit-Taking, Weaker Crude Oil

発信

-- Malaysian palm oil futures retreated from near four-week highs on Wednesday, as traders took profits and as crude oil prices eased, but Malaysia's plan to raise biofuel blending to 15% in June lent support.

The Bursa Malaysia Derivatives' June crude palm oil contract dropped 1.13% to 4,628 Malaysian ringgit ($1,171.35) per metric ton. The July contract declined 1.10% to 4,658 ringgit/mt in midday trade.

Expectations of weaker exports and higher production in April following a seasonal low in Q1 also weighed on prices. Cargo surveyors reportedly estimated a 15.7% to 16.8% month-over-month decline in Malaysian shipments for the April 1-25 period.

Lower purchases from top importer India, due to surging palm oil prices, contributed to export downtrend. The country's palm oil imports dropped 27% month over month to a one-year low of 505,000 metric tons in April, according to dealers cited by Reuters.

Purchases of rival edible oils rose as competitiveness of palm oil dampened. Dealer estimates reportedly showed that India's April soybean oil imports increased from a month earlier by 24% to 355,000 mt, and sunflower oil purchases more than doubled to a 22-month high of 435,000 mt.

Malaysian ringgit's 0.3% strengthening against the US dollar could further erode attractiveness of the country's cargoes, as it makes exports more expensive.

Nonetheless, domestic demand is set to increase as the Malaysian government proceeds with its B15 program beginning June. The move could add 300,000 mt per year of palm oil demand to current B10 levels, according to the industry body.

"April production is expected to increase, but with anticipated growth in domestic consumption, inventory accumulation is likely to be limited," price reporting agency MySteel said.

In Indonesia, exports also slowed, with March volumes falling to 1.31 million tons relative to the previous year's 2.0 mmt, and Q1 volumes declining year over year to 5.85 mmt from 5.35 mmt, data from statistics bureau showed.

In a similar manner, local consumption is set to rise beginning July, as the government raises its B40 mandate to B50. Malaysia's industry body said this could increase Indonesia's annual domestic palm oil demand by 3 mmt.

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