Complex oil market

The headline news from last week is Indonesia decision to increase Palm oil export tax from $3 to $18 from 1st February. This is a measure to protect domestic buyers from rising prices and slow export trade. This action is really on the back of strong prices already fro 2017 and prices that seem likely to continue to rise as crops continue to fall below expectations. With rising prices for competing Soy on the back of new US president and his protectionism policies. Add in currency weakness in Malaysia and you can see why prices are hitting highs. But what if America does bring in a import tax on Palm Oil? Will prices fall quickly? Coconut oil has been tracking other edible oils higher but also tight supply caused by end of year typhoons is also helping to push prices even further.

Desiccated prices have been much firmer of late tracking coconut oil prices. However strong supply from new start up mills in the Philippines and competition from Indonesia are all keeping prices from running away. In fact news that one Philippine shippers has a warehouse full of stock to sell is keeping prices much lower then we would of expected. The warning is that this extra supply might not last too long.

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