Palm oil demand jumps as discount to rivals widens

Band Rajendra Jadhav

MUMBAI, April 20 (Reuters)Palm oil demand is expected to surge in the coming months, driven by a growing discount on competing vegetable oils.

Higher demand for palm oil could boost Indonesian and Malaysian exports and reduce stocks, supporting prices FCPOc3which have already jumped 38% so far in 2022 as the war in Ukraine disrupted sunflower oil supplies.

“Palm has become lucrative for refiners because it is available at $150 a ton discount from soybean oil,” said Sandeep Bajoria, managing director of Sunvin Group, an oil brokerage and advisory firm. plant based in Mumbai.

“Refiners give preference to palm oil for May shipments.”

Bajoria was referring to Tuesday’s prices, but by Wednesday the discount had widened even further.

Crude palm oil (CPO) was offered in India at around $1,765 per ton, including cost, insurance and freight (CIF), for May shipments, compared to $1,930 for crude soybean oil. Crude sunflower oil was offered at around $2,100, dealers said.

In early April, the rebate for crude palm oil was $40 per ton.

Price-sensitive Asian buyers have traditionally relied on palm oil because of its low cost and short shipping times, but in early March it was trading at a higher price than soybean oil. and sunscreen oil.

India’s palm oil imports in April are expected to reach over 600,000 tonnes from 539,793 tonnes in March, and in May the import volume could exceed 650,000 tonnes, said a Mumbai-based dealer with a global trading company.

Like India, Bangladesh and Pakistan are also buying more palm oil for May shipments, said a Singapore-based dealer with a global trading company.

“Even China could increase purchases if the coronavirus outbreak is contained in the coming weeks,” the retailer said.

Buyers are having to choose between soybean oil and palm oil, due to the limited supply of sunflower oil, a New Delhi-based dealer said.

Countries around the Black Sea account for 60% of global sunflower oil production and 76% of exports, while Indonesia and Malaysia account for the bulk of global palm oil shipments. Argentina, Brazil and the United States are the main suppliers of soybean oil.

“Soybean oil supply is tight in South America. Palm oil supply has improved after Indonesia removed a local sales quota. So buyers opt for palm oil , which is also cheaper,” said the dealer in New Delhi.

Palm oil price discount to competing oils widens, paving way for higher demandhttps://tmsnrt.rs/3OrjPxK

(Reporting by Rajendra Jadhav; Editing by Bradley Perrett)

((rajendra.jadhav@thomsonreuters.com; +91-22-68414378; Reuters Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))

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