[Back]   [Comments]  [Print]

NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

17/04/2001

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

NULL

CATEGORY

HEADLINE

PALM OIL PRICES SEEN STAYING LOW UNTIL 2002
PALM OIL PRICES SEEN STAYING LOW UNTIL 2002

JAKARTA, April 16 (Reuters) - International palm oil prices are likely toremain depressed until next year due to an oversupply from the world'sbiggest producers Malaysia and Indonesia, a key industry official said onMonday.Chairman of Indonesian Palm Oil Producers Association (GAPKI), DeromBangun, predicted crude palm oil (CPO) prices would struggle to rise above$260 a tonne on a cost, insurance and freight (CIF) basis in Rotterdamthis year -- a far cry from the $700 a tonne seen in late 1998, whenprices hit their peak"Palm oil production in Indonesia and Malaysia will continue toincrease and it will depress prices. I don't see (CPO) prices exceeding$260 a tonne this year," Bangun told Reuters.Spot prices for CPO are now quoted at $240 a tonne CIF Rotterdam and$260 a tonne for May/June.Bangun said Indonesia's palm oil production would increase to 7.2million tonnes this year from 6.5 million tonnes last year, whileMalaysia's would rise to 11.2 million tonnes from 10.8 million tonnes lastyear.Industry expert Ivan Wong put Malaysia's stocks at the end of March at1.27 million tonnes. No estimates are available for Indonesia.But Bangun said prices should improve slightly in 2002 -- possibly to$300 per tonne -- due to slower crop expansion in Indonesia and Malaysia'sefforts to burn CPO as industrial fuel.He said security worries such as rampant looting in plantation areas,land disputes and the economic crisis which tripled the price of farmingmaterials, had virtually halted palm oil expansion in Indonesia in thelast three years and would result in slower growth in the coming years."We will see a decline in output growth, especially from Indonesia. Butoutput will still increase and prices will stay depressed," he said."But we may see prices rise to $300 a tonne next year if Malaysia'sefforts to burn CPO into fuel succeeds."Malaysia aims to burn 400,000 tonnes of CPO as industrial fuel thisyear to reduce its hefty stockpile.Industry officials there say CPO mixed with medium fuel oil has beensuccessfully burned as an industrial fuel by state utility Tenaga NasionalBhd

INDIA DUTIES COMPOUND PROBLEMCPO prices began their fall from $700 per tonne in early 1999 whenglobal stocks began to swell.Moves by India, one of the world's biggest palm oil consumers, toincrease import duties for all palm oil products, exacerbated theoversupply problem, Bangun said.India slapped a 75 percent duty on CPO and an 85 percent duty onrefined palm oil in February.The duties are much lower for palm's main rivals. The duty on crudesoyoil is 45 percent and 50.8 percent for refined soyoil."It (the duties) may cut our exports by 50 percent. Industries in Indiawill switch to soyoil," Bangun said.Bangun predicted Indonesia's palm oil exports would fall to 4.2 milliontonnes in 2001 from 4.5 million tonnes in 2000 partly due to the duties.Ministers from Malaysia and Indonesia are scheduled to visit India onApril 23-24 to discuss the duties. They will also visit China seeking morequotas for palm oil.