World Seed Oil Seen Lower First Time in 20 Years by Oil World

World production of oil from seeds is forecast to decline for the first time in 20 years on lower crushing of cottonseed, sunflower seed and rapeseed, industry researcher Oil World said.
The output drop will boost demand for palm oil, reducing stocks of the oil extracted from palm-fruit pulp by September next year even as its production rises 5.9 percent, the Hamburg, Germany-based company wrote in an e-mailed report today.
Soybean oil futures have slipped 4.8 percent in Chicago this year, while palm oil traded in Malaysia had slumped 26 percent in the same period on record Malay stockpiles. Crude palm oil prices in Rotterdam are now $50 to $60 a metric ton cheaper than Brent crude, according to Oil World.
“Oils and fats markets will enter their transition phase to relatively higher prices in coming weeks and months, as stocks are likely to decline from the current record level,” Oil World wrote. “Consumers worldwide are expected to become more dependent on palm oil.”
Production of oil from 10 seeds will slip 0.3 percent in 2012-13 to 101.2 million tons, Oil World predicted. Output of palm oil is seen climbing to 54.8 million tons from 51.7 million tons.
World output of 17 oils and fats is forecast to increase 1.1 percent to 186.8 million tons, the researcher said. Usage is forecast to rise to 187.9 million tons from 182.6 million tons in 2011-12, lowering stockpiles to 21.4 million tons at the end of September from 22.5 million tons a year earlier.
Consumption of palm oil is expected to jump 8 percent to 54.7 million tons in 2012-13 from 50.6 million tons the previous year, driven by insufficient supplies of seed oils.
Oilseed Crushings
“Year-on-year reductions in crushings of rapeseed, sunflower seed and other oilseeds, and reduced export supplies of competing vegetable oils will raise the demand for palm oil,” the researcher wrote.
The price decline of palm oil means the commodity has become more attractive as a feedstock for energy production, Oil World said. That could contribute to an accelerated drop of stocks in the next three to four months.
“Increasing quantities of palm oil are likely to be burned in power plants for electricity generation and heat,” Oil World wrote. “In addition, palm oil has improved its attractiveness as a feedstock for biodiesel production.”
To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Indonesia's Trade Ministry Resist To Change Palm Oil Tax Structure

JAKARTA, Dec 11 (Reuters)— Indonesia's trade ministry is resisting pressure from parts of the palm oil industry to change its export tax system in response to planned tax cuts by rival producer Malaysia, a junior minister said today. A proposed cut in crude palm oil (CPO) export taxes by number two producer Malaysia due to come in next year will make it easier for refiners or producers to ship out CPO when margins for refined palm oil are low.
Malaysia's tax move came almost a year after Indonesia, the world's top producer of the edible oil, reduced export taxes on refined palm oil to boost its processing industry. The Indonesian Palm Oil Association (GAPKI), which represents mostly plantation firms, has called for a reduction in palm oil export taxes to provide greater parity against Malaysian competitors.
“GAPKI has been proposing that the government changes the palm oil export tax structure,” Deputy Trade Minister Bayu Krisnamurthi said, adding that the proposal had not been discussed with other ministries. “The trade ministry has suggested not changing the export tax scheme, but to invest in infrastructure such as on storage tanks and increase domestic palm oil consumption.”
The Malaysian government, in a bid to entice customers, said it plans to cut export taxes for the crude grade to 8-10 per cent from 23 per cent early next year. Indonesia has set its December export tax for CPO at 9 per cent and 3 per cent for RBD palm olein.
On the downstream and processing side of the industry, the Indonesian Vegetable Oil Association says it wants to keep things as they are to maintain consistency in the business.
Last week, Achmad Suryana, director general at the agency for food security in the Indonesian ministry of agriculture, said initial talks had started between different ministries but no decision had been made. “A technical team has started talking about the possibilities and what is best for Indonesia,” Suryana said, at a palm oil conference in Bali, adding that discussions would involve the agriculture, trade and finance ministries.There was not timetable given for a decision.

Turn Palm Oil Waste Into Useful Fertiliser

Carbon Agro turns the waste into a nutrient-rich compost in a 25 day process that the company’s scientists developed in field trials over the past three years in Indonesia, where the firm has installed two compost systems worth $10 million combined.

The projects entail installing a series of ten-by-eight metre concrete boxes designed to naturally aerate the compost as it is periodically turned and watered with the watery sludge from the mill. When ready, the compost is trucked back to the oil palm plantations using the same vehicles that bring in the fruit bunches.

Tests have shown that the compost from one plantation can replace 20 to 30 per cent of the chemical fertilisers that growers typically use for the same space, and can improve the soil health in the process...

Source: New venture seeks to eliminate palm oil waste

VEGOILS-Record stocks drag palm oil futures to new 3-week low

* Futures market technically weak -trader
* Palm oil to revisit low of 2,220 ringgit-technicals
* November exports to rise on stronger Chinese demand -analyst (Updates prices, adds detail) By Anuradha Raghu

KUALA LUMPUR, Dec 4 (Reuters) - Malaysian palm oil futures fell to its lowest in more than three weeks on Tuesday as investors fret over the prospects of another month of record stocks in the world's No.2 producer.

Forward months were trading at a 3 percent discount to the benchmark February futures contract, signalling oversupply and keeping investors on edge although seasonally slowing output and Chinese demand should curb the stock build.

Record high stocks in Indonesia and Malaysia will see palm oil futures post their worst annual performance since the financial crisis in 2008. Palm oil prices have lost nearly 28 percent so far this year also on the deepening euro zone debt crisis affecting global economic growth.

"There is plentiful stock around -- that's the reason why the market is still technically weak. The local front is bearish," said a trader with a foreign commodities brokerage.

"Exports are holding quite well, the demand is still strong.

But unless you see a draw down in inventory, the market will be under pressure," he added.

The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell as much as 2,289 ringgit per tonne, the lowest since Nov. 12, before settling at 2,294 ringgit ($754) per tonne by the midday break.

Total traded volumes stood at 16,998 lots of 25 tonnes each, much higher than the usual 12,500 lots.

Technicals showed that palm oil would revisit its Nov. 12 low of 2,220 ringgit per tonne, said Reuters market analyst Wang Tao. [ID:nL4N09E0Q8] Malaysian crude palm oil exports are expected to rise in the next few weeks thanks to stronger demand from China ahead of Lunar New Year celebrations in February, and stricter import rules next year.

"We have assumed crude palm oil exports to increase by 5 percent to 1.85 million tonnes in November as Chinese traders are expected to stock up," Kenanga Investment Bank analyst Alan Lim said in a note to clients.

Kenanga expects inventory levels to "remain close to the very high level of 2.5 million tonnes" and keep crude palm oil prices below 2,500 ringgit in the near term.

Weak manufacturing data from the United States renewed concerns of slowing demand from the world's biggest oil consumer, offsetting optimistic factory data issued by China a day earlier.

Brent futures slipped below $111 per barrel on Tuesday but supply worries stemming from simmering tensions in the Middle East and worsening unrest in Syria helped cushion prices. [O/R] In palm oil's competing markets, U.S. soyoil for December delivery was almost flat in Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange fell 0.2 percent.