Tight global soyaoil supplies and high prices are shifting global demand to palm oil but palm prices are also likely to rise in early 2012, Hamburg-based oilseeds analysts Oil World said on Tuesday. "With insufficient export supplies of soyaoil, consumers in the importing countries have increasingly shifted to palm oil and sunflower oil," Oil World said.
South American soyaoil is currently around $135-$140 a tonne more expensive than Malaysian refined, bleached and deodorised (RBD) palm oil, it said. But high soyaoil prices are justified by fundamental factors, it said. "Soyaoil exports of the US, Argentina and Brazil declined sizably from last year in October and will be down by about 20 percent from last year in October-December 2011," it said. "This is mainly a result of increases in the domestic soyaoil consumption of their biodiesel industries as well as in higher world palm and sunflower oil exports."
The palm oil price firmness in past weeks has been partly caused by recent strong commercial demand, it said. Global palm oil prices hit a seven-week-high on Friday. Even higher palm oil prices are likely in 2012 as firm demand meets likely lower production in key produced such as Malaysia and Indonesia, Oil World said. "For January-June 2012 we expect a noticeable slowdown of south east Asian palm oil production as trees are likely to take a rest after the high yields in 2011," it said. "This is likely to be a major factor behind the prospective recovery of palm oil and vegetable oil prices in the first half of 2012."
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