Singapore’s palm-oil plays are likely to be in focus, but may not decline too much even as Indian palm-oil importers are seeking to renegotiate contracts, with CPO futures prices touching three-year
lows Tuesday.

“There’s only so many sources you can buy palm oil from. I don’t think they can renegotiate all the contracts,” says OCBC analyst Carey Wong; he notes there were some renegotiations during the financial crisis.

“Even if palm oil prices come lower, it’s just a matter of CPO companies making less profit. Most of their costs are around US$250/ton ($308/ton).” But he notes some concerns; “palm oil tends not to do as well during the cold seasons because it clots easily. From the consumer demand side, they probably won’t want to buy palm oil. Industrial demand should still be there, although it may not be as strong.”

He also says “we’re seeing slowing demand from China. It’s going to be a worrying issue because China is one of the biggest consumers of oil and instant noodles. Palm oil is used extensively in the making of
instant noodles.”

Golden Agri is down 2.3% at $0.64, Wilmar is down 0.3% to $3.19 and First Resources shed 4.4% to $1.96.

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