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 Kamar Nor Aini Bt Kamarul Zaman
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 Malaysia, Indonesia to gain from palm oil boom

15/05/2008 (Commodity Online), Kuala Lumpur - With oil experts predicting a palm oil boom for the next five to ten years, the major beneficiaries are going to be Malaysia with a record output predicted for 2009 and Indonesia set to attract more investment into palm oil plantations.

The other day, Dorab Mistry, Director of London-based Godrej International, whose vegetable oil forecasts are closely followed world wide said that vegetable oil demand is going to remain buoyant in the medium to long term.

Malaysia’s palm oil output is expected to reach a record high of around 18 million metric tons in 2009, according to senior analysts. In 2008, the production is expected to be 17.3 millin to 17.4 million metric tonnes., they said.

Mistry said the annual worldwide growth in demand for vegetable oils is between 5.0 million tons and 6.0 million tons. “Over the next five years, we require additional 25 million to 30 million tons of vegetable oils supply,” noted Mistry.

He said there aren’t much prospects for growth in production of high oil-bearing oilseeds and the best hope for expansion in acreage is in palm oil.

Even if palm oil production is increased by 2.0 million to 3.0 million tons each year, it may not be sufficient to meet the global demand. Therefore, Mistry is upbeat and bullish on palm oil prices for the medium to long term.

The problem with leading palm oil producer, Malaysia is that it doesn’t have sufficient land to expand acreage except for parts of Sarawak. Therefore, even Malaysian palm oil plantations had increasingly eyed Indonesia for increasing their acreage.

Unless, more acreage is added to Indonesia can the target of additional production of 5.0 million-6.0 million tons of annually can be met.

Analysts said a lot will depend on palm oil industry promoting sustainable production of palm oil and convincing the environmentalists of its eco-friendly practices

Meanwhile, Malaysia is likely to go through one of its driest spells of weather in more than a year, through this week, which can expedite oil palm harvesting, according to a U.S.-based meteorologist.

This is perhaps the driest weather in recent memory, possibly since April 2007, because the monsoon has shifted well to the north and has been disrupted by tropical storms, Mike Tannura, who runs a meteorological forecasting service for agricultural commodities, said in a recent report. He said this is likely to facilitate rapid oil palm harvesting at least until this weekend.

In Malaysia Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed lower yesterday on profit-taking following Monday’s gains, dealers said.

There was some heavy selling in the market as investors rushed to book profits on concerns over ample supplies in the physical market, a dealer said, adding that the fall was also in line with the downtrend in the soyoil market.

However, another dealer said the futures market is expected to be firmer throughout the week supported by strong export data for May 1-10 released Monday by cargo surveyors Intertek Testing Services and Societe Generale de Surveillance.

At close, May 2008 lost RM40 to settle at RM3,460 per tonne, June 2008 decreased RM40 to RM3,514, July 2008 slipped RM38 to RM3,532 and Aug 2008 was down RM35 to RM3,340.


Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533