Palm Oil Market To Remain Resilient, Says Phillip Futures

By Rosemarie Khoo Mohd Sani KUALA LUMPUR, Aug 3 (Bernama) -- The crude palm oil (CPO) market is expected to remain resilient this year, given Malaysia's weather abnormalities earlier this year with the onslaught of the El Niño which is usually associated with dry weather. Phillip Futures Sdn Bhd Derivatives Product Specialist, David Ng, said the La Nina, the opposite effects of El Niño, still remained a possibility for now if it were to happen in the fourth quarter this year. "There is a chance the palm oil prices may climb later this year given the weather uncertainty. La Nina will usually cause supply distruptions which are positive for prices overall," Ng told Bernama. However, he said, there are several other issues that are benefitting the industry as a whole. "Firstly, it is the yearly severe drop in demand for CPO, especially from major markets like China and India. "If this trend continues for the next couple of months, it is clear that weak demand will put pressure on prices," he said. Ng said this in response news reports of the fading prospects of the palm oil in the near term. It also said China's demand for Malaysia's palm oil in the first half of this year has dropped 50 per cent year-on-year, following the Chinese government's release of two million tonnes of rapeseed oil from the state reserves. "Personally, I think the rapeseed oil stocks only compensate for half of the CPO demand and another part is coming from the competitive price pressure from Indonesia which at times may offer lower prices given the different tax structure between both countries," said Ng. On Malaysia's progress in implementing the B10 biodiesel programme, he said, it will depend on the crude oil price trend. "The current low crude oil prices may not entice more production and it is not deem feasible now," Ng said. -- BERNAMA