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Agriculture Asia

Weak SE Asian currencies keep palm underpinned

Palm oil remains the exception to otherwise subdued vegoil and gasoil commodities markets this morning as palm traders continue to focus on soft Indonesian and Malaysian currencies as a spur to exports.

The Malaysian Ringitt has continued to soften this week after clawing back some value relative to the dollar in mid-August. YoY the currency is down 50% vs the dollar, relative to a 21% drop in value for the Indonesian Rupiah relative to the US dollar over the same period. Overnight the Indonesian government reaffirmed its ambitions for the domestic fuel supply chain to up its biodiesel intake to a 20% blend, which would push consumption to 4.8mn t next year from closer to an expected 1.3mn t this year.

Strong palm oil exports will help support the government’s ambition after it imposed a $50/t tax in May to bridge the domestic gap between biodiesel and gasoil prices. India’s recent tax hike on palm imports meanwhile is seen as too puny to have much impact on inflows given the size of the palm price depreciation.

MS – 22/09/15

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