Commodity Online
JAKARTA: Rising demand for biofuel, increase in exports from China and India are driving up crude palm oil prices. Chinese and Indian imports this year are already up 26 per cent and 17 per cent respectively compared to corresponding period in 2007.

A leading industry analyst has predicted that CPO prices should rise 10 per cent by the end of June and more than 20 per cent by next February on the back of strong demand, tightening supply and buoyant crude oil prices, Financial Times reported.

Vegetable oil prices started tracking crude oil prices in 2007 after years of moving in the opposite direction.

The paper quoting Dorab Mistry, director of Godrej International, a London-based trading company, forecasted the benchmark palm oil futures on Malaysia’s derivatives exchange could hit M$4,000 ($1,245) by the end of June and M$4,500 by February the be warned that prices were unlikely to remain high for long after that and could tumble rapidly if crude oil prices collapsed or the weather proved better than expected.

Palm oil futures prices peaked at M$4,491 on March 4 this year and then plummeted to about M$3,100 before rallying on increased export taxes in Indonesia, as well as higher Chinese and Indian demand. Palm oil futures in Malaysia closed at a 10-week high on Monday, up 0.5 per cent to M$3,673.

Supply might slowdown in September and production from October 2008 to September 2009 is likely to exceed demand by less than 10 per cent. Indonesia, the only country where significant land for expansion is available, is expecting to increase oil palm estates by 600,000 hectares a year over the next seven years.

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This entry was posted on Wednesday, May 28th, 2008 at 11:00 am and is filed under Palm Oil Prices News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.