Low Palm oil stocks could signal start of the climb

Since late 2018 the prediction was that Palm oil price would start to rise as crops slowed. Now whilst we have seen signs that crops have been lower in 2019 stocks levels have been stable telling the tale that whilst we have lower crops so demand was also down. But Reuters are now reporting that stock levels have now hit a 5 month low. This could be the trigger most have been waiting for and indeed Palm oil price is up already. At the moment its a not a significant rise but still price today has hit a 1 month high. Other edible oils have yet to react indeed coconut oil still hovers just over the $700 mark. Again its likely that any increase in price will be slow and drawn out and it may not start just yet but its another sign of where prices are headed.

2018 was the year of oversupply and to date 2019 has followed this track for desiccated coconut. We have seen time and again some shippers offering short shelf life stock for prompt shipment way below forward prices. Within the last week we have still seen more offers for prompt far below price for say September. This does confuse the market as buyers push to cheap prices as far forward as possible. But with prices likely to rise for the rest of the year shippers are not foolish enough to offer too cheaply far forward or they risk big losses.


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