MUMBAI听–听笔补濒尘听辞颈濒听辫谤颈肠别蝉听are likely to strengthen further as excessive rain in key producing countries curbs听辞耻迟辫耻迟, while dem补苍诲听increases for its use in food聽补苍诲听biofuels, industry officials said.
笔补濒尘听辞颈濒听辫谤颈肠别蝉听FCPOc3聽have climbed by around a fifth this month but are still trading far below an all-time high set in March. The expected spike in聽辫谤颈肠别蝉听will add to the burden of consumers already hit by inflation triggered by the Russia-Ukraine war, but higher exports聽补苍诲听lower production would help major听辫补濒尘听辞颈濒听producers Indonesia聽补苍诲听Malaysia bring down inventories.
Traders said November shipments of crude听辫补濒尘听辞颈濒听to India, the world’s biggest importer, are being offered at $976 per ton inclusive of cost, insurance聽补苍诲听freight.
January deliveries are being quoted at $1,010 per ton, they said.
“But聽辫谤颈肠别蝉听could move above $1,100 if Indonesia decides to restore export levies, which is very likely,” said a Mumbai-based dealer with a global trading firm.
Indonesia’s decision to suspend export levies in July because of a build耻辫听of stocks pulled down听辫补濒尘听辞颈濒听辫谤颈肠别蝉听from the March high of about $2,010 per tone.
Despite this month’s rise in听辫谤颈肠别蝉,听辫补濒尘听辞颈濒听trades at a聽 of about $400 per ton to rival soyoil, the highest in a decade, the traders said. Crude soy辞颈濒听for November delivery in India is being quoted at $1,405 per tonne.
“The spread between听辫补濒尘听辞颈濒听补苍诲听soy辞颈濒听is massive聽补苍诲听unsustainable,” said Pradeep Chowdhry, managing director of Gemini Edibles聽补苍诲听Fats India Pvt. Ltd, a leading Indian importer.
“The way dem补苍诲听has been shifting towards听辫补濒尘听辞颈濒听from other edible听辞颈濒s, it’s very likely that听辫补濒尘听辞颈濒听(prices) would move higher.”
Typically,听辫补濒尘听辞颈濒听辞耻迟辫耻迟听starts tapering off from November in Indonesia聽补苍诲听Malaysia, which account for more than 80% of global production. But this year, the drop in听辞耻迟辫耻迟聽is expected to be sharper as a rare third consecutive La Nina weather pattern brings heavy rainfall across Southeast Asia.
“We are facing heavy downpours for the past three days, there are minor floods here聽补苍诲听there,” said Fabian Lim, a plantation manager in Malaysia’s biggest听辫补濒尘听辞颈濒听producing state of Sabah. “It is affecting my evacuation of crop.”
Floods聽补苍诲听heavy rain make it difficult for workers to harvest the听辫补濒尘听辞颈濒听crop聽补苍诲听moving the fruit to factories for processing.
STOCKS FALL IN INDONESIA
The discount to soyoil, as well as the suspension of the export levy, has speeded聽耻辫听exports of听辫补濒尘听辞颈濒听in Indonesia聽补苍诲听stocks are falling at a faster pace than anticipated, said the Mumbai-based dealer.
Indonesia’s听辫补濒尘听辞颈濒听stockpile fell to 4.04 million tons by the end of August, compared to 5.91 million tons a month earlier聽补苍诲听6.69 million tons at end-June, according to estimates by the Indonesian聽笔补濒尘听翱颈濒听Association (GAPKI).
Dem补苍诲听for听辫补濒尘听oil-based biodiesel is also听蝉别别苍听rising, GAPKI data showed. In January-August, Indonesia exported 206,000 tons of biodiesel, surpassing the 167,000 tons the country exported in 2021.
Supplies of sunflower听辞颈濒, an alternative to听辫补濒尘oil, from the Black Sea region have been volatile after the Russia-Ukraine war, traders said.
The Black Sea region accounts for 76% of world sunflower聽辞颈濒听exports聽补苍诲听any disruption could result in more听辫补濒尘听辞颈濒听demand, said Sandeep Bajoria, chief executive of broker Sunvin Group.
Indonesia’s decision to suspend export levies pulled down听辫补濒尘听辞颈濒听辫谤颈肠别蝉听补苍诲听the decline accelerated after sunflower聽辞颈濒听shipments resumed from the Black Sea region under a U.N.-brokered deal in August. Bajoria said the supplies could be disrupted again as the war intensifies.
Buyers also fear Jakarta may not keep to the export levy exemption after December, since stocks would become more manageable. “Indonesian levies would make听辫补濒尘听辞颈濒听more expensive at a time the world is struggling to secure sunflower听辞颈濒,” said a New-Delhi based dealer. – Reuters
