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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

08/03/2002

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

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NULL

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HEADLINE

MALAYSIAN PALM OIL SEEN REACHING 1,500 RGT/TONNE
KUALA LUMPUR, March 7 (Reuters) - Malaysia's crude palm oil futures mayreach 1,500 ringgit ($395) a tonne in the third quarter of 2002 due to anexpected decline in global edible oil stocks, an industry source said onThursday."The second position on MDEX should approach 1,500 ringgit becausestocks are down,"James Fry, managing director of LMC International Ltd, aBritish-based economic consultancy told Reuters on the sidelines of anedible oils conference.The second month of the crude palm oil futures traded on the MalaysianDerivatives Exchange (MDEX) last touched 1,500 ringgit in May 1999. Thecontract closed at 1,163 ringgit on Thursday.Fry said there would be a decrease of about 1.5 million tonnes ofedible oils stocks, which include soyoil, rapeseed and sunflower, in2001/2002 (October-September).The level of stocks believed to be available in the global market wascurrently estimated at 3.4-3.7 million tonnes, according to industrysources."This translates into a price forecast that sees the MDEX secondposition approach 1,500 ringgit during the July-September quarter, beforea reaction occurs to higher CPO output and the crushing of the newseason's oilseeds in the northern hemisphere," said Fry."Prices in the final calendar quarter will average in the region of1,300 ringgit per tonne," he added.Fry said decline in global edible oils stocks was mainly due to fallsin sunflower and rapeseed production, adding that an expected fall inMalaysia's palm oil output in 2002 was also a factor.Malaysia, the world's largest palm oil producer, was expected toproduce as little as 11 million tonnes in 2002, down from 11.8 milliontonnes last year because of the current replanting programme and theimpact of the El Nino weather phenomenon.

ROTTERDAM SOYOIL MAY ALSO RISEFry said lower edible oil stocks would also boost crude soyoil pricesin Rotterdam, which is the centre for vegetable oil trading in Europe."The average of the crude soybean and palm prices in Rotterdam isprojected to rise by a further $100 per tonne at the peak of almost $460during the July-September quarter of the year, when stocks will be at ayearly low," he added.On China, Fry said the world's most populous country was likely toimport around two million tonnes of palm oil this year, unchanged fromlast year, despite its entry to the World Trade Organisation (WTO), whichallows it to import 2.4 million tonnes."The reasons are the familiar ones of functionality; even RBDsuper-olein can only be used as a liquid oil in hot climates. At thetemperatures found in much of China, it becomes cloudy, and localconsumers suspect adulteration," he said."Therefore, in the centre and north of the country, palm oil isrestricted to uses in frying and as a hard fat. It already dominates theinstant noodle market, but in many other applications often has to competewith plentiful animal fats," he added.China, one of Malaysia's main buyers, purchased 1.02 million tonnes ofpalm oil from Malaysia in 2000, up from 800,135 tonnes in 1999.