Palm oil prices rise sharply amid export restrictions from Indonesia

Last week, palm oil futures on the Malaysian stock exchange rose 7.3% to a record 5,322 ringgit/ton, or.1,271/ton, following oil prices. However, the main driver of growth was the news about the restriction of exports of crude palm oil from Indonesia, which is the world’s largest producer and exporter, selling almost 50 million tons annually.

The Indonesian Ministry of Commerce has decided to limit exports of crude palm oil for 6 months to contain the growth of prices in the domestic market of the country, which increased by almost 40% compared to last year. Starting from January 19, the maximum price for all types of vegetable oils is set at 14 thousand Indonesian rupees (0 0.98) per liter. And the government will compensate vegetable oil producers for the difference in price.

Under the new rules, sellers of oil, in order to obtain an export permit, must declare the volume of the exported batch, as well as inform the authorities about the volumes of crude palm oil that they plan to sell on the domestic market.

Yesterday, March palm oil futures on the Malaysian stock exchange fell 1.1% to 5,260 ringgit/ton or 1 1,256/ton on the back of lower prices for oil, soybeans and soybean oil.

March soybean oil futures on the Chicago Stock Exchange on forecasts of a reduction in the soybean harvest in South America rose for the month by 8.7%, in particular for the last week – by 7.7%, but yesterday fell by 1.6% to 1 1,365/ton, as recent precipitation in Argentina and Brazil improved the condition of crops and harvest prospects.

Prices for black sea sunflower oil, following neighboring markets, rose to F 1,370-т 1,400/ton FOB, but processors are in no hurry to raise purchase prices for sunflower, given the significant reserves of producers and low demand for sunflower oil.

A new wave of coronavirus is spreading in India, which may lead to increased quarantine and a drop in demand for oil. China is preparing to celebrate the new year and the Olympics, so it will reduce trade activity in the coming weeks.

It is worth noting that quotes for Canadian canola yesterday fell by 2.64% to 995 CAD/ton or 7 787/ton, while rapeseed futures in Europe fell by 5.2% to 719.5 €/ton or 8 813.75/ton on expectations of a reduction in demand for biodiesel and a slowdown in the EU economy due to political disputes between Russia and the West.

GrainTrade

Tags: Russia, China, Indonesia, EU, prices, India, Malaysia, palm oil, restrictions