9 September, 2010

CRUDE palm oil (CPO) futures prices hit a three-week high yesterday as market players took up positions ahead of the Hari Raya Aidilfitri holidays, dealers said.

They said market talk of a strong Chinese demand for vegetable oils spurred volume.

A dealer said the likelihood of a lower-than-expected US soyabean crop also fuelled the rise in the price.

September 2010 contract increased by RM44 to close at RM2,739 per tonne, October 2010 rose RM46 to RM2,670, November 2010 went up RM50 to RM2,620 and December added RM48 to RM2,612.

Turnover increased to 14,090 lots from 10,997 lots last Friday.

Open interest declined to 67,081 contracts from 69,764 previously.

On the physical market, September South added RM30 to RM2,750 per tonne.

Bookmark to

9 September, 2010

US food giant refuses to stop buying palm oil from Sinar Mas group as Burger King joins Nestle and others in criticising its illegal activities

The billion-dollar agribusiness giant Cargill is refusing to cut its ties with an Indonesian palm oil supplier who has admitted illegally clearing forest.

Nestle, Kraft, Unilever and Burger King have stopped trading with the Sinar Mas group after an independent audit of its operations found it broke Indonesian law by clearing land before any assessment had been made of its conservation value.

Announcing its decision this week, Burger King said the practices of Sinar Mas and its impact on the rainforest was ‘inconsistent with our corporate responsibility commitments’.

The company has also been accused of trying to cover-up the critical report by initially claiming it cleared them of destroying peatlands or forests of high conservation value in Indonesia.

However, Cargill, which has also been linked to deforestation in the Amazon and is the world’s largest trader of agricultural commodities, said it was encouraged by the group’s commitment to ‘taking corrective actions and to strengthening its standard operating procedures’.

It also says it is aiming to buy 60 percent of its palm oil from Roundtable for Sustainable Palm Oil (RSPO) certified growers by 2010. Sinar Mas is currently aiming for all its existing growers to become a RSPO certified by 2015.

Greenpeace has criticised such commitments as unforceable on the ground. It said Cargill would now become the focus of its campaigning against the illegal forest and peatland clearance undertaken by Sinar Mas.

‘We will not stop until Cargill has stopped trading with Sinar Mas,’ said Greenpeace Indonesia forest team leader Bustar Maitar.

Bookmark to

AFP

9 September, 2010

KUALA LUMPUR — Malaysia’s once-vaunted biofuel industry has seen production grind to a halt since a March announcement that the government’s mandatory switch to the green energy will be delayed to June 2011.

Malaysia had ambitions to become a global leader in biodiesel and unveiled grand plans for the industry as the price of crude oil spiralled, peaking in mid-2008.

However, the future of the alternative fuels is now in question given cheaper crude prices and the higher cost of Malaysia’s palm oil.

Malaysian Palm Oil Board (MPOB) figures show that the production of biodiesel, a mixture of diesel with five percent processed palm oil, dropped 99 percent from 12,640 tonnes in March to just 137 tonnes in July.

Malaysian Biodiesel Association vice-president U.R. Unnithan said the country had the capacity to produce 2.6 million tonnes of biofuel annually but that demand had completely dried up.

“There is no demand domestically for biofuel as the government is only implementing its plan next year and because they are providing no subsidy, we can’t even cover costs,” he told AFP.

“Unless the domestic market picks up… it is all negative margins at the moment.”

Unnithan said Malaysian biofuel cannot compete in international markets as many countries have protectionist measures and subsidies in place.

“If we are provided with the right subsidies and incentives, the Malaysian biodiesel industry can thrive. Feedstock prices are high at the moment which means that anything we produce would be more expensive without subsidy.”

Crude palm oil (CPO) prices have risen from 2,623.50 ringgit (843 dollars) per tonne in March to 2,717.50 ringgit per tonne last month.

After several delays, the government has said it will implement its biodiesel plan in stages from June 2011 and will set up six petroleum depots with blending facilities.

MPOB director general Mohamad Basri Wahid said the government was still on track to implement its plan by 2011, despite the production standstill.

“There is a gap in the market at the moment before the government’s biodiesel plan is implemented next year but we will go ahead with our plan and are determined to see biofuels succeed in Malaysia,” he told AFP.

Malaysia has approved 56 licences for biodiesel output, which would create a production capacity of 6.8 million tonnes, but most plants have not been set up.

The country is the world’s second-largest exporter of palm oil after Indonesia, and the two countries account for 85 percent of global production.

Bookmark to

9 September, 2010

DULL demand from overseas and domestic buyers will keep crude palm oil futures prices on Bursa Malaysia Derivatives rangebound next week, a dealers said.

“It is difficult to judge the market movement next week because the holiday is too long and most traders have already stocked up their positions before the Muslim (Hari Raya) celebration,” he said.

The dealer said trading may be also tight as investors would look out for the data on the first ten days of palm oil exports in September and the monthly industry statistics to be released by the Malaysian Palm Oil Board.

A lacklustre performance was reported for August by surveyors.

It was reported that the Malaysian Palm Oil Board would release the data on September 15, instead of September 10 due to the Hari Raya holiday.

“This factor along with lack of leads on the domestic front will prompt players to cut their positions or restrain them from taking heavy positions,” the dealer said.

During the week, the market traded mostly higher as traders actively chased the physical market on expectations of lower production with plantation workers expected to take a long break to celebrate Hari Raya next week.

The market will be closed on Friday for Hari Raya. Trade will resume on Monday, September 13. On a weekly basis, September 2010 was up RM8 to RM2,695 a tonne, October 2010 rose RM20 to RM2,624 a tonne, November 2010 gained RM28 to RM2,570 and December 2010 added RM39 to RM2,564.

Weekly turnover, however decreased to 54,944 lots from 106,226 lots previously, while open position stood at 69,764 contracts from last Friday’s 68,853 contracts.

On the physical market, September South was unchanged from last week’s close of RM2,720. – Bernama

Bookmark to

Sept. 6 (Bloomberg) — Palm oil futures jumped by the most in more than three weeks amid speculation that supplies of U.S. soybeans, which can be crushed to make a substitute oil, may be lower than expected.

The November-delivery contract surged as much as 2.2 percent to 2,626 ringgit ($844) a metric ton on the Malaysia Derivatives Exchange, the biggest intraday gain since Aug. 13, and was at 2,614 ringgit at the 12:30 p.m. break in Kuala Lumpur. Futures gained 1.1 percent last week, the first weekly advance in three.

“There are some concerns the U.S. soybean crop may be lower than expected, and that’s going to act as a catalyst for palm oil,” said Arhnue Tan, an analyst at ECM Libra Capital Sdn. in Kuala Lumpur. The most-active contract traded at the highest level today since Aug. 18.

Soybean futures may rise on speculation that the U.S. Department of Agriculture will Sept. 10 cut its forecast for the crop because of bad weather in the Midwest, 24 of 33 traders and analysts surveyed from Chicago to Tokyo predicted on Sept. 3.

The U.S. soybean crop will be 3.37 billion bushels, 1.8 percent less than the USDA’s forecast of 3.433 billion, Allendale Inc., said on Sept. 3, citing a survey of farmers.

Soybeans for November delivery rose 2.6 percent to close at $10.35 a bushel on Sept. 3 on the Chicago Board of Trade, the biggest gain for a most-active contract since July 15. The U.S. markets are closed today for the Labor Day holiday.

Premium Widens

December-delivery soybean oil gained 1.6 percent to 40.86 cents a pound on Sept. 3, widening the vegetable oil’s premium over palm oil to $75.70 a ton that day from $73.58 a day earlier, according to Bloomberg data.

On the Dalian Commodity Exchange, May-delivery soybeans climbed as much as 1.3 percent to 4,087 yuan ($601) a ton, while soybean oil jumped as much as 1 percent to 8,224 yuan a ton. Palm oil for delivery in May advanced as much as 1.1 percent to 7,386 yuan a ton.

“Some concerns of dry weather in Latin America at a time when planting is about to begin is also helping soybeans and other oilseeds,” ECM Libra’s Tan said.

Still, palm oil may be pressured by the first monthly gain in stockpiles in a year in Malaysia, the second-biggest producer, after exports fell in August, she said. Exports from Malaysia slumped 17.8 percent in August, independent cargo surveyor Societe Generale de Surveillance said on Sept. 1. Shipments declined 13.6 percent, according to surveyor Intertek.

Bookmark to