Palm Oil Prices to Track Crude Oil Prices
By Mahanum Abdul Aziz
Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron said palm oil prices would able to touch RM3,500 per tonne level if the crude oil prices hit US$100 per barrel in the future.
However, he said palm oil prices might not trade higher than crude oil prices as demand for the commodity might come down due to higher prices.
“Knowing that petroleum is a diminishing resource, its prices will likely remain high, and by association, palm oil prices will similarly be remuneratively high in the future,” he told Bernama at the ongoing International Palm Oil Congress 2007 (PIPOC 2007).
He said the price level of over RM2,000 per tonne for palm oil was a good price range for the industry to satisfy demand for the commodity.
Yusof said palm oil industry would continue to have bright future due to its potential as a feedstock for production of biodiesel.
“The biofuel industry has created a new market outlet for palm oil. It will continue to help palm oil to have remunerative prices, which correlates closely to the petroleum price,” he said.
He said higher prices would enable palm oil producers to chalk up a higher revenue and it would attract more investments for the industry going forward.
“There will be more reinvestments or further invesments in the palm oil sector, both upstream and downstream, because of the promise of good profits or returns in the industry,” he said.
Yusof said labour shortages, productivity issues like stagnating yields, limitation of land, sustainability, deforestation and global warming issues were among the challenges that the palm oil industry would face in the future.
He said a further expansion of oil palm in the country would be constrained by limited land resources with labour becoming a problem with the industry increasingly being dependent on imported labour.
Further reinvestment strategies in downstream activities were important to ensure continued competitiveness for
He said Malaysian palm oil has a good story to tell and with the right brand support, it could remain a dominant branded product in the world market in the future.
– BERNAMA
