Palm Oil May Top 4,000 Ringgits Soon

Kuala Lumpur: Crude palm oil prices that have been hovering around 3,500-3,700 Malaysian ringgit (MYR) a tonne could touch 4,000 MYR a tonne quicker than many think, a representative of Frost and Sullivan told the delegates at the “Palm and Lauric Oils Price Outlook” conference here on Tuesday. Over 1,700 delegates from over 40 countries are participating. Run-up to Budget 2008-09

Biofuels prop up the prices of agricultural goods through increased demand, setting a floor for other crops, he pointed out, adding that the market will continue to look for ways to grow, especially bioethanol crops. Energy security and politics will be a key reason behind this, the expert asserted.

Importantly, over the next five, 10 or 20 years, whether oil will keep up with the demand growth in the context of factors like growing population, energy needs, crops competing for land and water stress should cause considerable concern, he reasoned.

Suggesting that palm bio-diesel was a cost-effective environment-friendly fuel, U.R. Unnithan of Carotino Sdn Bhd pointed out that in a free market world, palm bio-diesel was still the most cost effective diesel substitute as shown by Malaysian data. In terms of energy efficiency, greenhouse gas emissions and sustainability, the product stood out as an excellent eco-friendly fuel, he said.

Given palm’s best yield improvement potential, it can alleviate the food versus fuel problem, according to Unnithan.

Industry, Trade Upbeat On Palm Oil Price Outlook

Kuala Lumpur: A day ahead of the much-awaited annual Palm Oil Price Outlook organised by Bursa Malaysia, the mood within the vegetable oil industry and trade, especially among producers and exporters, is absolutely upbeat. And why not? Run-up to Budget 2008-09

The market has gone through an unprecedented period of bullrun that has taken prices to four digits in dollar terms, a stark contrast with the long bear run of 2001-2002.

Driving factors

Currently both crude palm oil and soyabean oil are trading well above the psychological $1,000 a tonne, nearly five times higher than prices 5-6 years ago; and twice the rates traded in 2006.

What changed in the recent years?

An unusual combination of factors - robust surge in demand, supply uncertainties and fund play - are currently seen driving the commodities market in general, and vegetable oil market, in particular, up.

Asset class

Importantly, commodities are now an asset class in the league of stocks, bonds, foreign exchange and real estate. Last one year, some commodities such as gold have outperformed other traditional asset classes.

Obviously, there is a larger flow of funds for trading commodities; and when the market fundamentals face uncertainties or imbalances - such as the one vegetable oil market is currently facing - can funds lag behind?

Trading volumes

Trading volumes in the futures counters have grown rapidly. Whether Bursa Malaysia for crude palm oil or Chicago Board of Trade for soyabean oil, trade transactions are exploding.

The interest in vegetable oils is heightened by other factors such as the crude market, ocean freight rates and exchange rate.

Will crude palm oil reach ringgit 4,000 a tonne or is there a possibility of correction down to around ringgit 3,000? Bursa Malaysia has lined up several expert speakers from around the world to present their perceptive analysis of the current global vegetable oil market dynamics and expectations of the shape of things to come.

Analysis meet

The keynote speech will be delivered by the Guest-of-honour, Dr Peter Chin Fah Kui, Malaysia’s Minister for Plantation Industries and Commodities.

Dr James Fry of LMC International will speak on the lessons we can learn from the past bull markets and Thomas Mielke, Hamburg-based editor of Oil World, will share his thoughts on the reactions of the world vegetable oil market to challenges from the energy market.

Dorab Mistry, Director of the London-based Godrej International, will present a paper on palm oil price outlook with special reference to India. There will also be experts speakers on palm oil producers’ perspectives and soya oil complex outlook.

A special session on biodiesel too has been organised. About 1,700 participants are expected to turn up for the event.