Average Asian palm oil prices will stay unchanged in the second half of this year and in 2011 as ample supplies of rival soyaoil cap demand, a Reuters survey showed on Tuesday.
A median poll of 16 analysts who cover plantation firms in Indonesia and Malaysia forecasts average palm oil prices at 2,500 ringgit ($779.8) in 2010, up 2 percent from 2,450 ringgit predicted in January and slightly lower than an average price of 2,519 ringgit in the first half of the year.
Analysts are counting on strong economic growth in the world's top two palm oil consumers - India and China - to maintain prices despite a flood of soyaoil from top producers Argentina and Brazil. "Its a slow grind upwards because palm oil is becoming less competitive," said Abah Ofon, a Dubai-based commodities analyst with Standard Chartered Bank. "But I still think overall demand will still expand and go above the growing supply scenario."
The run up to the Asian festival season, which starts with the Muslim month of fasting in August and ends with a slew of Chinese public holidays in October, has not seen a rush for palm oil cargoes. That is due to ample stocks at Chinese ports and a recovery in India's monsoon that may boost domestic oilseed output, traders have said.
Even though China and India's growing population requires additional imports, traders are looking to pick up soyaoil crushed from a record crop in South America that has been flooding markets since April. Palm oil's discount to soyaoil has tumbled to $5-$6 a tonne from about $100 in December in cash markets, traders said. Even so, analysts believe that there could be some upside if crude oil prices start rising, as this would support the whole vegetable oil complex as soyaoil and rapeseed oil are getting increasingly used in the US and European biofuel sector.
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