Palm oil prices despite El Nino damage under pressure

Palm oil prices in an Exchange bath between El Nino and crude oil prices

The production of palm oil has delivered in 2015 in the months of peak season August to Oct still comparatively cheap crops with about 2 million tonnes per month . But the month of Nov. has brought the feared losses as a result of the El Nino drought. The yield slipped to 1.6 million t significantly off.

In anticipation of the loss of production the palm oil prices were up again rd. $550 per t increased. Hopes of further price increases were however broken by the sudden collapse of the crude oil price . Domestic demand and exports of palm oil declined significantly as a result of the low price competition between mineral and biodiesel.

The result is a so far still not seen inventory build-up of 2.6 million  t. these amounts may suffice to mitigate any further crop losses. However, this year's El Nino weather event should stop until March 16. As a result, the seasonal decline in production could be accelerated significantly.

To what extent is the current decline in the crude oil prices of duration , there is little doubt.  According to expert opinions the courses could already with the spring economy back towards $60 the barrel move. The results of the recent climate conference in Paris could also provide more demand for renewable raw materials.

The palm oil prices provide low prices for competing products as the leader in the market for vegetable oils rapeseed, soybean and other oilseeds.  The quotes have moved closer to each other. The range is determined primarily at the upper end of rapeseed and soybean oil price.  At the bottom of the palm oil price is due to its low production.

The fallen crude oil price will become the determining factor for prices of vegetable oils and their raw materials. Low mineral diesel courses click on bio diesel sales, so that demand for raw material amounts only to the extent of admixture of coercion.  Weak demand leaves so little room for price increases in a better than average powered oilseed market soy focusing.

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