NUSA DUA, Indonesia: Following are comments by key analysts at a palm oil industry conference in the Indonesian island of Bali:

JAMES FRY, CHAIRMAN OF LMC INTERNATIONAL

PRICE FORECAST

“As Malaysian Palm Oil Board stocks drop below 1.8 million tonnes by June next year, the European Union premium of crude palm oil over Brent crude should move up towards $200.”

“Adding the CPO premium to the Brent crude oil price, we get these EU CPO price forecasts of $1,000 with Brent at $110 a barrel and $865 with Brent at $90 a barrel by next June.”

(This translates to Malaysian palm oil futures trading at around 2,530 ringgit per tonne if the mineral oil drops to $90 a barrel, Fry said. And if Brent remains at $110, palm oil futures could hit 2,950 ringgit.)

IMPACT OF CHINA RAISING QUALITY STANDARDS FOR RBD PALM OLEIN

“There are three possible outcomes: more crude palm oil or crude olein imports for refining; more polishing of RBD olein imports; and maybe more fractionation of RBD palm oil imports.”

“Palm imports will be high for the next two weeks, and then be slow in January as the application of the new policies is studied. They should settle at a level down slightly from 2012.”

UNCERTAINTY OVER CHINA’S EDIBLE OIL IMPORT REFORMS

“The immediate effect of China’s announcement about higher quality specifications for RDB olein in January has been to boost imports as buyers try to avoid uncertainties about how it will be applied.”

“Will Chinese Customs authorities allow bulk RBD olein imports, as now, but with a requirement that it be polished to meet the tighter specifications?

“Will application of the regulations differ in different regions, i.e., will they apply before/after polishing?

What about the standards applied to RBD palm oil imported for fractionation? Will they be tightened?

In the background, how will the rules on blending of oils for food use and on “gutter oil” affect palm oil?”

TUG OF WAR ON EXPORT, IMPORT TAXES

Palm’s role in meeting oil demand in the next few months is affected by new policies round the world.”

“Among exporters, Malaysia will match Indonesia’s refinery export tax incentives in January. This will boost its share of RBD exports and help to reduce MPOB stocks. This is mildly bullish for CPO prices.”

“Among importers: India reacted to Indonesia’s tax reforms by lifting RBD olein import tariffs. However, it is China that needs the closest watching, as the changes to its CIQ quality requirements for RBD olein add to the impact of its measures to tighten the rules regarding the labelling of blended oils tighter.”

PALM OIL OUTPUT PROSPECTS

“Last year was a remarkably good year for CPO output all over the world, from S.E. Asia to Latin America. This year’s output is now benefiting from the good rains in most regions in 2011 and so far this year.”

“There is also growing confirmation that, regardless of pressures to slow palm plantings, high prices have been promoting the expansion in palm areas. We can expect growth of 2-3 million tonnes a year in Indonesian CPO output for the next few years.”

“Over the next six months, the output of oils from all three major oilseeds will be restricted by poor crops and so CPO is crucial in balancing supply-demand.”

THOMAS MIELKE, EDITOR, OIL WORLD

PALM OIL’S DISCOUNT TO SOYOIL

“Palm oil prices are undervalued, I consider the huge discount of $350 to soyoil as not sustainable. It is a matter of time with current surplus in palm oil getting disposed.”

SOUTH AMERICAN CROPS

“South American crops are going to be key for prices. September to February 2012/13, global crushing of ten oilseed varieties forecast to suffer an unprecedented drop of 5 million tonnes.”

“In contrast, crushing jumped8.4 million tonnes a year ago and 5.8 million tonnes per annum on the average of the past 14 years. The world needs more palm oil to offset these reductions.”

“Soybean crushing could be compensated by higher palm oil supplies.”

“September/February 2012/13 world soybean supplies down by 24 million tonnes. Little rationing in world soybean consumption so far.” – Reuters

Source : The Star

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