Thursday, September 6, 2012

20120906 1729 Palm Oil Related News.

Palm-Oil Veteran Mistry Exposes Indonesia’s ‘Hidden’ Reserves
By Swansy Afonso 2012-09-06 03:30:00.0 GMT

     Sept. 6 (Bloomberg) -- Palm-oil reserves in Indonesia, the
largest producer, may total about 4 million metric tons, twice
as much typically estimated, according to Godrej International
Ltd., which forecast a rise in Malaysian stockpiles to a record.
     “It is difficult to be bullish on palm-oil prices,” Dorab
Mistry, a director at Godrej International Ltd., told a
conference in Singapore today, citing the stockpiles, slower
economic growth and rising output. The tropical oil may trade
between 2,900 ringgit ($930) and 3,300 ringgit a ton this month
and next, he said. The most-active contract closed at 2,990
ringgit on the Malaysia Derivatives Exchange yesterday.
     The reserves in the two largest producers may limit price
gains even as soybeans, which can be crushed to produce a rival
oil, are poised to extend a record rally after drought curbed
supplies. Benchmark palm oil in Malaysia has dropped 5.8 percent
this year, helping restrain gains in global food costs spurred
by the worst U.S. drought in more than half a century.
     “The big story of 2012” is the stockpiles in Indonesia,
Mistry told the gathering organized by Goldman Sachs Group Inc.,
according an advance copy of his remarks “Normal stocks of palm
products in Indonesia in the last two years have been of the
order of 3.5 to 4 million tons as against the normal
conventional guesstimate of 1.5 to 2 million tons.”
     Palm oil, the world’s most-consumed vegetable oil, is used
in everything from instant noodles to soaps and biofuels. Mistry,
born in India and based in London, has traded vegetable oils for
more than three decades.

                         Soybeans Rally

     Palm oil has dropped in 2012, extending last year’s 16
percent fall, while soybeans rallied 43 percent. The divergence
has widened palm oil’s discount to soybean oil to as much as
$320 a ton on Sept 5, the biggest difference since 2008,
according to data tracked by Bloomberg.
     “These hidden, or hitherto ignored, palm-oil stocks in
Indonesia are the key reason for the dismal performance of palm
oil,” said Mistry, who said he looked into Indonesian holdings
after tax changes in 2011. “Until recently, it has been the
opinion of most analysts that Indonesia hardly kept palm-oil
stocks and that Malaysian palm-oil stocks were the bigger.”
     Palm-oil stockpiles in Malaysia probably rose to an 11-
month high of 2.14 million tons in August from 2 million tons in
July, according to the median in the Bloomberg survey of
analysts and plantation companies yesterday. Inventories reached
a record 2.27 million tons in November 2008, according to data
from the nation’s Palm Oil Board. Mistry didn’t give an estimate.

                       Production Outlook

     Output in Malaysia may gain to about 2 million tons in
September and October driven by a seasonal upswing, and 2012
production may be 18.2 million tons, Mistry said. Indonesian
production may peak in November, with annual output of about 27
million tons compared with 25.2 million tons last year, he said.
     “A big chunk of stockpiles in Indonesia are due to the
very tardy logistics,” said Mistry. “It can take up to two
months for the fresh-fruit bunches harvested in Kalimantan to be
converted into refined palm products and exported,” Mistry said.
Kalimantan is the Indonesian portion of Borneo Island.
     Soybean may rally to as much as $20 a bushel in December,
according to Mistry, while corn may gain to about $9 a bushel.
The most-active soybean contract reached an all-time high of
$17.89 on the Chicago Board of Trade on Sept. 4, while corn
reached a record $8.49 a bushel on Aug. 10.

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