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Vegetable Oil Market Report April 2013

 

Palm oil futures have been mostly unchanged since October 2012. They traded today at Myr 2302 / mt. The highest in these 8 months was 2568 and lowest 2222 / mt. A range of about $100 / mt which by recent standards is very stable. PFAD has dropped $150 / mt in the same time but even that has traded in a range of $50 / mt since the New Year. It is worth noting as well that PFAD traded at $1080 / mt exactly 1 year ago. It is trading at nearly half that value today and has not been this low since November 2009.

Some of the key factors at play in the vegetable oil markets are:

1. Palm oil stocks remain persistently high. Whilst they dropped to 2.22mn mt at the end of March we are now entering into seasonal increases in palm oil production. There is also information showing high levels of crude palm oil in ports around the world including in particular China.

2. Exports so far in April have slowed compared to March.

3. US Soyoil futures have been weaker recently with USDA numbers showing a higher carry over stock.

4. China has supposedly cancelled nearly 2mn mt of soybean purchases from Brazil due to strike related logistics delays. The Brazilian government has denied this.

5. There is a general commodity sell off going on. Gold has fallen to a 2 year low whilst copper and aluminium are also falling. Brent Crude dropped below $100 / bl and its lowest level for 9 months. The trigger it seems was weak economic data coming out of China. They are ‘only’ growing at 7.7%.

Protected Fats Price Outlook

GoldenFlake and Butterfat Extra prices may decline in coming months as lower priced raw materials feed through into supply. This will depend on how the currency moves in coming weeks. PFAD has been steadier so changes to Nutrilac prices will be affected by currency.

Further forward the fundamental outlook is mostly bearish for fats though much of the downside seems to be already priced in. We continue to live in fear of a big (and unpredictable) purchase of PFAD by the biodiesel sector which can send the market up sharply but with lower Brent crude prices this week that ought to be less likely.

Please follow us with daily updates on Twitter: @TridentFats

Daniel Chilvers            Andrew Howie

07515 971667                01684 561748

16th April 2013

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