Palm oil futures expected to stay strong until March
Delhi — Palm oil futures will stay strong at least until March on an increase in export levies by top grower Indonesia, with supplies seen tight during the first two months of 2022, according to veteran trader Dorab Mistry.
The most-used vegetable oil is expected to trade between 4,000 ringgit ($955) to 4,400 ringgit ($1,050) per tonne during the October-February period, before slightly dropping in March, Mistry, director at Godrej International, said at the Globoil conference on Saturday. Futures have averaged 3,908 ringgit so far this year, according to data compiled by Bloomberg.
Higher benchmark prices may potentially curb purchases by top importer India in the coming months as the festive-season buying by the South Asian nation will almost be over by next month. Malaysian stockpiles may swell further after surging 25% in August from a month earlier.
Palm oil prices will be underpinned by Indonesia’s biofuel mandate and higher export taxes, Mistry said. Indonesia last month raised its palm oil export duty for September to $166 a tonne from $93 a month earlier after a rally in the tropical oil. Any move by Indonesia to increase its export tax generally boosts demand for Malaysian palm oil and supports futures in Kuala Lumpur.
Mistry said benchmark prices may slide to 3,200-3,800 ringgit during April to September on expectations of favourable weather conditions for oil palm trees. The commodity has jumped more than 23% this quarter mainly on supply concerns and a rally in soybean oil, palm’s closest food and fuel substitute.
Bloomberg News. More stories like this are available on bloomberg.com
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