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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

10/10/2003

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

Business Times

CATEGORY

HEADLINE

Palm oil prices expected to stay at current levels
October 10 2003 - PALM oil prices are expected to remain at current levelsof about RM1,500 a tonne in the near term, an attractive price against itscompetitors amid steady global demand.

Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said the outlookaugurs well for palm oil because its prices are currently more than US$150a tonne (US$1 = RM3.80) cheaper than main rival soyabean oil.

Palm oil is already at a discount. Just imagine the additional buyers wecan rope in if palm oil becomes an additional US$100 cheaper, he saidyesterday.

Dr Lim was speaking to reporters after officiating at a seminar onProductivity Improvement In Palm Oil Milling and chairing a dialoguesession with the milling sector in Bangi, Selangor.

His optimism is supported by some traders, who said last week that thecommodity’s prices could reach as high as RM1,600 a tonne by the year-endand remain firm in the first quarter of next year.

This is due to declining stockpiles and possible poor production of otheredible oils in coming months.

Oil World magazine also said that India, the world’s largest importer ofedible oil, may boost imports this month and in November because ofdeclining domestic stockpiles.

Earlier in his speech, Dr Lim said the collapse of the World TradeOrganisation (WTO) talks in Cancun, Mexico, does not augur well for thepalm oil industry.

This is because the industry will continue to face unfair competition,especially from developed countries which not only subsidise their farmersto produce oilseeds but also subsidise their exports.

We have to find other ways to make the playing field a little level sothat we can compete in the international market, he added.

Dr Lim said that developing countries’ resources are limited and cannotmatch developed countries in terms of production and export subsidiesgranted to their agriculture sector, which run into billions of dollars.

He said that to counter this, the Government has come up with the Palm OilCredit Payment Arrangement and counter- trade to penetrate new markets andconsolidate the existing markets.

Even this simple credit facility is under threat in the current round ofWTO negotiations although more trade-distorting measures, such asproduction and export subsidies, continue to be tolerated in the WTO.

Likewise, Malaysia’s ability to use government procurement of goods andservices from overseas for counter-trade involving palm oil is also beingthreatened as attempts are being made to bring government procurementunder the WTO’s purview.

Of course, our position on these issues is clear we will not agree tothese changes unless the playing field is really level so that we cancompete on equal terms, said Dr Lim.