KUALA LUMPUR, March 6 (Reuters) - Following are estimates on palm oil prices and other edible oil markets from leading analysts at the Bursa Malaysia conference that ends on Wednesday.
JAMES FRY, CHAIRMAN, LMC INTERNATIONAL PRICE FORECAST
- Expects Malaysian stocks to fall to 1.8-1.9 million tonnes at their mid-year low point.
- Says Bursa Malaysia crude palm oil (CPO) prices and local delivery prices will come together at 2,625 ringgit ($845) by mid-year, if Brent crude falls to $105 per barrel.
- Says CPO prices on an FOB basis would be near 2,775 ringgit ($890) in June or July taking palm oil prices in Europe near $950.
- Says European palm kernel oil prices will rise a little faster to stand just above $1,000 at mid-year, or $950 on an FOB basis.
PALM BIODIESEL
- Says when CPO in Europe is at parity with Brent crude prices, Southeast Asian CPO will trade at a discount to crude due to freight costs. Palm oil in Indonesia enjoys a wider discount to Brent crude than Malaysia as its export taxes hold down local prices.
- Says the discount has made palm methyl ester (PME), or palm-based biodiesel, a price-competitive transport fuel in the local markets in Malaysia and Indonesia.
- "If I were Petronas or Pertamina today, I would be rushing to buy local CPO to upgrade into biodiesel for blending with diesel, so as to hold down the costs of supplying motorists with their diesel fuel."
- Says PME is also attractive in exports market, thanks to a combination of high stocks, a steep discount of Asian CPO to crude oil and a $300 per tonne blending credit for biodiesel in the U.S.
- "We are seeing striking proof that markets work. Cheap palm oil in relation to crude oil does wonders for the use of PME as a fuel. Many factors have reinforced the attractions of CPO as a competitive source of fuel in recent months."
- Says higher PME exports will likely hasten a drop in CPO stocks and raise prices.
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