- There were a few developments in the palm oil industry this week, which boosted CPO prices. Since the start of the week, CPO prices have risen by 3.2% to RM2,349/tonne.

- USDA (US Department of Agriculture) released its demand and supply projections for vegetable oils early this week.

- USDA trimmed its forecast of US soybean production for 2013F/2014F by 4.7% from 3.42bil bushels to 3.2bil bushels.

- Estimate of ending soybean inventory in US was also reduced by 25.4% from 295mil bushels to 220mil bushels.

- The downward revision in numbers was due to weaker yields resulting from excessive rains in May and June 2013.

- Based on current prices, the price discount between soybean oil and CPO is 27.5% compared with the average of 17.4% for the month of June.

- The price discrepancy between the two commodities has been widening partly due to the depreciation of the Ringgit against the US$.

- Apart from this, Bloomberg reported that inventories at the major ports in China amounted to 1.14mil tonnes for the week ending 12 August 2013.

- This was 140,000 tonnes more than a week ago. Stockpiles had declined in the prior two weeks to below one million tonnes.

- Finally, independent cargo surveyors said that palm oil shipments from Malaysia rose 18% to 19% in the first 15 days of August compared with the same period in July.

- The increase in demand came from China and India. China bought 126.7% more palm oil during the period while shipments to India expanded by 109.5%.

- Shipments to European Union (EU) contracted by 7.4% in the first 15 days of August compared with the same period in the previous month while US received 71.7% less palm oil.

Source: AmeSecurities