Palm oil exports rebound, prices rise
(Business Times) 09 July 2001 -THE domestic palm oil market may havebottomed out with exports rebounding and prices trending upwards from thelows of February.
Exports for this year are expected to exceed last year's 9.08 milliontonnes as traditional customers step up purchases.
Malaysia has already sold 4.37 million of the commodity in the first fivemonths of 2001, up 30 per cent from 3.34 million tonnes in thecorresponding period a year ago, according to the Malaysian Palm Oil Board(MPOB).
And crude palm oil prices have strengthened to RM893 a tonne last weekfrom RM795.50 in June and RM743 in May.
The commodity was trading in February at RM693.32 a tonne on the spotmarket, its lowest level in more than a decade; and a sharp reversal offortune from the peak of RM2,505.71 in May 1998.
Traders said the market is expected to show continued strength with strongindications from key traditional buyers - namely India, China and Pakistan- of a spike-up in their imports this year.
India bought 2.38 million tonnes in 1999 and 2.03 million tonnes lastyear; China 800,135 tonnes and 1.02 million tonnes; and Pakistan 1.02million tonnes and 1.10 million tonnes, respectively.
Malaysian Palm Oil Association (MPOA) chief executive M. R. Chandran saidthe three countries have been taking the opportunity to buy more palm oilfollowing the extended low prices since early this year.
"They have been locking in purchases for the past few months at prices ofbetween RM700 and RM800," he told Business Times in Kuala Lumpur onFriday.
Never mind how good or poor this year's US soyabean harvest is in August,Malaysia's palm oil exports to India are likely to surpass last year'svolume, he added.
Chandran's forecast is supported by the January-May 2001 export figuresfrom MPOB which showed that India bought 926,158 tonnes of palm oil fromMalaysia, up 22 per cent from 758,857 tonnes in the same period last year.
The increase in China's uptake was even more dramatic, up 51 per cent to463,929 tonnes from 307,911 tonnes before.
Likewise, imports by Pakistan, the third largest buyer of Malaysian palmoil, jumped 22.1 per cent to 465,213 tonnes for the five months from381,144 tonnes a year earlier.
Chandran said despite the 92.4 per cent import duties imposed on Malaysianpalm oil, India has continued to buy substantial amounts of the commodity.
"One reason is the country is facing a drought. . . . but Indian farmershave also been slow to respond to new government incentives to shift toplanting oil seeds from grain (wheat, oats and barley)," he said.
As a result, India has found itself faced with a shortage of not only palmoil but also sunflower, rapeseed, mustard and other vegetable oils.
China is also experiencing a drought in some parts of the country.
In addition, grain crops have come under pest attacks in the last twoweeks.
On the Kuala Lumpur Stock Exchange (KLSE) on Friday, plantation stocksreflected the improvement in the sector's outlook.
IOI Corp Bhd rose 9 sen to RM3.04, Kumpulan Guthrie Bhd 7 sen to RM2.15,Perlis Plantation Bhd 5 sen to RM1.45, and Austral Enterprise 4 sen toRM2.28.
However, Ladang Perbadanan Fima Bhd fell 10 sen to RM3.22, and Highlandsand Lowlands Bhd 3 sen to RM2.40.