Europe Expected to Import More Palm Oil

KUALA LUMPUR/SINGAPORE: European consumers will be forced to boost shipments of palm oil, despite a vigorous campaign by green groups against it, after a drought that shrivelled oilseed crops across the Black Sea region. Palm oil futures on the Bursa Malaysia Derivatives Exchange climbed to a 15-month top last week and the market could be set for further gains as European consumers scurry for supplies to satisfy demand from the food and fuel sectors. A storm could be brewing in global vegetable oil markets, analysts say, although not on the scale seen in US wheat futures, which surged to two-year highs this month. “Europe’s rapeseed crop was lower than expected and Ukraine is going to have a very limited supply available for exports,” said Doug Whitehead, a commodities analyst at Rabobank in London. “It really means that rapeseed oil supplies will be very much constrained, so it is likely we will see palm oil moving as a substitute.” Hamburg-based analysts OilWorld forecast the European Union’s palm oil demand to rise 4.4 per cent to 5.7 million tonnes in the oil marketing year to September 2010, making the region the No.3 buyer after India and China. That coincides with expectations for the European Union’s rapeseed crop to fall 7.8 per cent to 19.9 million tonnes this year from a year ago while Ukraine’s sunflower crop may drop 2.7 per cent to 7.1 million tonnes, OilWorld data showed. Excessive rains are likely to cut canola production in Canada, reducing exports nearly 20 per cent to 6 million tonnes. LS Data from cargo surveyors shows that demand for Malaysian palm oil from the region has outpaced India and China so far in August, and traders expect more. “We expect some new orders coming in this week onwards to about September or October,” said a trader who deals with European buyers. European buyers may have to push environment issues linked to palm oil on the back burner as they struggle with lower domestic supplies, although top importers will be unwilling to take shipments from firms accused of destroying rainforests to expand palm estates. – Reuters Source : Business Times

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