Palm oil prices set to rise in festival season, touch Rs 337 per 10 kg

Padmaja Shastri

Chennai, July 15: It may be wise to stock-up on your oil requirements in advance this festival season as prices of palm oil continue to go northward in the last 15 odd days. The RBD (refined, bleached and deodorised) palmolein oil prices are going up everyday - from Rs 253 per 10 kg on June 29, 2001, to Rs 337 per 10 kg on July 13, 2001 - and are only expected to go up.

One of the main reasons for this continual upsurge is the falling palm oil production and reducing closing stocks in Malaysia coupled with increasing exports last month in Malaysia.

Following a massive drive of cutting-down old palm trees in that country, palm oil production slumped by 6.11 per cent from 9.85 lakh tonne in May 2001 to 9.24 lakh tonne in June 2001.

Its closing stock also fell down by 13 per cent from 11.85 lakh tonne in May to 10.31 lakh tonne in June due to a spurt in its exports last month by 10.6 per cent from 8.78 lakh tonne in May to 9.69 lakh tonne in June. For the first time, Europe imported 2.05 lakh tonne, China, 1.75 lakh tonne and India, 1.50 lakh tonne.

Sources in the trade say that this trend will continue. For one, arrivals will be poor in the coming months, as the peak production season of palm kernels in Malaysia, which is usually in July-August has been delayed to September-October this year. As peak imports of India happen in July-August due to the beginning of the festival season, Malaysia is expected to be bullish. China has also released its quota of 7 lakh tonne for the July-December 2001 period.

China and Malaysia are the top importers of Malaysian palm oil, and now following the soaring soya prices even EU countries have started importing palm oil.

Also, the low harvest figures of soya in the US have flared-up the prices in Chicago Board of Trade (CBoT) this week, which has made the Commodities and Monetary Exchange of Malaysia bullish. The FOB price in Malaysia went up to $345 per tonne on July 13, 2001, from $252.50 per tonne on June 25, 2001.

Even though domestic oilseeds (groundnuts, soya, mustard, rapeseed, coconut, til, sunflower and mustard) production is expected to increase by seven per cent to 23.60 million tonne this oil year (November 2000 to October 2001), India is expected to increase its oil exports to 5.4 million tonne from 4.7 million in the previous oil year, according to an USDA (United States Department of Agriculture).

Of this 3.3 million tonne is expected to be palm oil and one million tonne soyabean oil. However, as soyabean prices are increasing by the day, Indian imports may shift to palm oil. Meanwhile, importers and traders alike are making hay while the sun shines - selling their stocks at huge profits.