Soy product futures stumbled, backpedaling in unison with soybeans. Soyoil futures inched lower, retreating in late dealings after holding firm for most of the day. Strong export demand and fears of tightening world vegoil supplies was an underpinning feature in soyoil futures, said Bill Nelson, analyst with Doane Advisory Service. Soyoil gained product share versus soymeal on spreads, as the availability of soybeans for crushing is seen alleviating any near term soymeal supply tightness, analysts said. December soyoil settled 0.04 cents or 0.1% lower at 44.93 cents per pound. December soymeal ended $7.20 or 2.3% lower at $308.50 per short ton. (Source: CME)
eBio: High Grain Prices To Hit EU Biofuels Sector (Source: CME)
The European Union's burgeoning biofuels sector could suffer if grain prices stay high for too long, the head of a trade body representing European bioethanol said. Rob Vierhout, Secretary-General of the European Bioethanol Fuel Association, or eBio, said a recent surge in the price of grains such as wheat, which bioethanol refiners process to make fuel alcohol, could lead to some plants shutting down. "It could well mean that some companies stop producing because the raw material is such a substantial part of production costs--up to 70% with grain at the level it is now," he said. Ethanol prices in the EU have increased significantly in the past year. According to figures from analyst FO Licht, European ethanol prices in Rotterdam on a free-on-board basis last week were at EUR620 to EUR640 a cubic meter, up around EUR100 from the same time last year.
Vierhout attributed part of the increase to a surge in world grain markets, which have seen prices spike in recent weeks after Russia--the world's third-largest wheat exporter--banned grain exports for up to a year. Europe's biofuels sector has expanded rapidly in recent years. Fuel ethanol production in the 27-nation bloc rose by 31% in 2009 to 3.7 billion liters, stoked by targets to reduce EU greenhouse gas emissions by 50% compared with fossil fuels by 2017. Demand for bioethanol--which can be mixed with gasoline to create a cleaner form of fuel--is also rising. Last year, the EU consumed 4.3 billion liters, up from 3.5 billion the previous year, an increase of 23%. But Vierhout said he doesn't expect expansion to increase as demand struggles to keep pace with supply. He estimates that this year the sector will see a 3 billion-liter overcapacity as production from existing projects increases and new plants come on line.
Nomura: Higher Palm Oil Output Next Year To Ease Prices (Source: CME)
An increase in palm oil production in Indonesia and Malaysia by about 2 million metric tons in 2011 will likely ease palm oil prices to an average MYR2,500 per metric ton, Nomura Securities' plantation analyst Ken Arieff Wong said. Speaking at a media roundtable during its annual Asia Agri & Food Day, Ken said Nomura has maintained the neutral rating on palm oil with futures prices averaging MYR2,500/ton and spot prices hovering around MYR2,570/ton in 2011, if crude oil averages $95 per barrel. Prices are expected to ease tracking ample global supply of soybeans against the backdrop of a bumper harvest in South America and a likely record harvest in the U.S, said Tanuj Shori, Nomura's soft commodities and supply chain analyst. Only a small portion of this year's soybean crop has been crushed so far and ample remaining stocks will also help ease the pressure on prices, he said.
"Some of the refiners in India have switched to soy-oil from rival palm oil," because of the narrowing price difference between the two, he said. However, the trend could change next year when palm oil prices ease. Crude palm oil production in Indonesia, the largest producer globally, is likely to reach 23.9 million tons in 2011, up 8% from the estimated 22.2 million tons this year because of increased mature acreage and a general improvement in yields, said Wong. That's above the 22.5 million tons estimate given by leading vegetable oils analyst Dorab Mistry during an oilseeds conference in Mumbai over the weekend. Yields tend to move in cycles, where periods of lower yields are usually followed by higher yields, Wong said.
Gain on Asian demand outlooks
JAKARTA/KUALA LUMPUR, Sept 28 (Reuters) - Global vegetable oil markets edged higher on Tuesday as investors bet on strong holiday demand from China and India.
Concerns that erratic weather will curb production of soybeans in South America and China as well as Canadian canola are also underpinning agriculture markets.
Indonesia 2011 palmoil output growth at 10 pct-Nomura
SINGAPORE, Sept 28 (Reuters) - Indonesia's crude palm oil output is expected to grow as much as 10 percent in 2011, compared with 5 percent estimated this year, due to improving yields in the world's top producer, Nomura said on Tuesday.
"A 5 percent growth is at best in 2010 because there are downside risks if the yields don't recover in the second half of 2010," Ken Arieff Wong, research analyst at Nomura Securities Malaysia, told a media briefing.
Philippines' 2010 coconut oil exports seen up 57 pct
MANILA, Sept 28 (Reuters) - The Philippines' coconut oil exports are expected to grow 57 percent to around 1.3 million tonnes this year on improving demand and output, up from a previous estimate of 21 percent growth, an industry group said on Tuesday.
Earlier this year, the United Coconut Associations of the Philippines (UCAP) had projected the country's 2010 exports of coconut oil would hit 980,000 tonnes, from 808,007 tonnes in 2009.
