Edible oil exports by Indonesia are likely to rise marginally this month on healthy demand from India and Europe and a weaker currency. Traders said on Thursday that exports could reach 860,000 tonnes in June, up from 850,000 tonnes in May. Up to 90 percent of Indonesia's edible oil exports consist of palm oil and the country's is the second biggest producer after Malaysia.
The rest are coconut oils and oleochemicals. "The rupiah has weakened. So this puts extra pressure to export palm oil at a time when local demand is flat," a Jakarta trader said.
"The Europeans have been active lately." "We are offering products, such as crude palm oil, at about $2.50 a tonne discount than Malaysian products," he added.
The rupiah has fallen 2.78 percent against the dollar this year in reaction to higher corporate demand for high-value oil imports and debt repayments.
On Thursday, it was quoted at 9,570 to a US dollar. On Thursday, Indonesian crude palm oil spot contract for June was offered at $365.50 a tonne, free-on-board, at Belawan, down from $370 the previous week. Malaysian CPO was offered at 1,395 ringgit a tonne, free on board, at Paris Guiding.
Malaysian crude palm oil futures broke through the key psychological support level of 1,400 ringgit a tonne on Wednesday on a combination of surging output concerns to weak prices of soyaoil and a possible currency revaluation. But Indonesian traders brushed aside worries that palm oil production could overtake demand in coming months. "I don't see prices dropping further.
I think India will need to buy," said one Median trader. "Overall production in India is generally good but not better than last year because of drought in some parts of the country."
Indian edible oil traders said earlier this week the country's purchases are expected to rise to around 4.8 million tonnes this year from 4.4 million tonnes a year ago, mainly because of lower global prices.
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