Record soyabean prices will cause a major swing in demand towards cheaper palm oil in coming months which in turn will push palm prices up, Hamburg-based oilseeds analysts Oil World said on Tuesday. "Global dependence on palm oil will rise significantly in the next 12 months to compensate (for) insufficient supplies of other vegetable oils," Oil World said. "We expect palm oil prices to recover owing to increased export demand."
Soyabean prices remain close to a record high hit on August 30 caused by concerns about drought devastation to the US crop, following similar drought damage earlier this year to major exporters Brazil and Argentina. But palm oil did not achieve the same price rises as seen in soyaoil in August, Oil World said. "Palm oil prices are undervalued," it said.
The price discount of refined, bleached and deodorised (RBD) palm olein oil fob Malaysia against Argentine soyaoil widened by around $100 a tonne fob in the past four weeks and in recent days touched $280 to $290 a tonne, Oil World said. This price difference will transfer demand from soyaoil to the leading palm oil exporters Indonesia and Malaysia but palm output is also likely to rise in Thailand, Central America and South America, it said.
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