 "Palm oil price to rise on El Niño")
Crude palm oil prices were likely to climb to 2,500 ringgit in the benchmark Bursa Malaysia Derivatives on the possible effect of El Nino in major producing countries like Malaysia and Indonesia, Dorab Mistry, director, Godrej International, said here on Wednesday.
Crude palm oil for delivery in December rose for six days in a row to 2,450 ringgit, a 15-month high, on Tuesday on a weakening ringgit and expectations of recent dry weather affecting yields.
“Crude palm oil futures will trade at the upper end of this range due to the weakness of the ringgit. If the ringgit falls further this trading range will have to be expanded to 2,400 ringgit. It is likely to reach 2,500 ringgit for a short time, but this level is not sustainable unless mineral oil prices rise significantly,” Mistry said at a conference here.
India’s vegetable oil imports are likely to surpass 15 million tonnes to set a new record in the November 2015-October 2016 oil year. Vegetable oil imports into India are estimated at 14.1 million tonnes in the oil year 2014-15, a rise of 21 per cent from the previous year, according to the Solvent Extractors’ Association. Imports surpassed last year’s level by August this year.
“India will import an additional 1.5-2 million tonnes next year on lower production,” said James Fry, chairman, LMC International, an Oxford-based commodity trading company.
India is the world’s largest importer of vegetable oil for several years as production has stagnated at around 7 million tonnes. Around 70 per cent of India’s vegetable oil consumption is imported. Crude palm oil is imported from Malaysia and Indonesia and refined soya oil arrives from Argentina.
“Lower prices have resulted in dumping of over 2.4 million tonnes of vegetable oil. An increment of 1.5-2 million tonnes of imports may not be possible. But India will import 15 million tonnes next year,” said BV Mehta, executive director of the Solvent Extractors’ Association.
There are reports of crop failure in the kharif season as well as the last rabi season. Oilseed production in India is expected to be lower.
Atul Chaturvedi, chief executive officer of Adani Wilmar, which produces the Fortune brand edible oil, called for a hike in the import duty to make the differential between crude and refined oil 15 per cent. The government on September 18 raised the import duty to 12.5 per cent on crude oil and 20 per cent on refined oil. Despite this increase, the differential is 7.5 per cent, insufficient to protect India from dumping.
Thomas Mielke, a global analyst, forecast India’s oilmeal exports to remain subdued due to lower production and rising consumption. Oilmeals are largely used as cattle feed.
