Recovery in Crude Palm Oil (CPO) futures on the Multi Commodity Exchange is unlikely in the short term on reports that India may go slow in its buying as the country has enough stocks of edible oils supported by higher acreage expected in soya this season.
MCX CPO June contracts were down nearly 11% to trade at Rs 357 per 10 kg on Tuesday from Rs 402 in mid-May. On the other hand, NCDEX refined soya oil June futures fell just 6% to trade at Rs 478 per 10 kg over the past one month as palm oil competes with soya oil for applications in food and bio-fuel in the global markets.
?Fresh orders from India may slow after the country built up record stockpiles of vegetable oils. Export from Malaysia may see some downturn in the second half of 2009 as India has enough stocks and buyers here may restrict their requirements in the short term. Also, the country expects higher acreage in soyabean this season,? a leading broker said.
Spot prices of CPO also fell sharply by nearly 12.5% to trade at Rs 357 per 10 kg ex-Kandla over the last month on restricted buying interest. ?Domestic demand in physical markets in soya oil and refined palm oil was dull over the past few days and there is a disparity in the market between import cost and the market price. Price may continue to weaken and is expected to reach below Rs 350-level,? he said.
The actively-traded June 2009 contract on Bursa Malaysia closed at RM 2,480 a tonne on Tuesday after reaching a high of (Malaysian Ringgit) RM2,651 on June 2. Apart from Bursa Malaysia, CPO contracts abroad are traded on the Dalian Exchange in China, MCX in India and the Joint Asian Derivatives Exchange (JADE) in Singapore. It was also reported that Indonesia plans to launch its own CPO physical contract in July.
In May 2009, India was believed to have purchased over 8 lakh tonne of vegetable crude oils, of which the bulk of about 7 lakh tonne were refined palm oil and CPO.