Crude palm oil (CPO) price in Malaysia may cross 4,000 ringgits shortly mainly on increasing demand, lower stocks and declining supplies with weather concerns, said Dorab Mistry, director, Godrej International Ltd, in Malaysia on Wednesday.
Speaking on ?Palm Oil Price Outlook 2008-09?, he said for the year 2007-08, demand for oil grew at four million tonne despite high prices. Demand for biofuel grew by about two million tonne. Therefore, against growth in demand of almost six million tonne, supply grew by only 3.8 million tonne.
?The year 2007 also turned out to be a year full of adverse weather. Strong economic growth in high-population countries together with declining supplies due to adverse weather made a deadly cocktail for our markets,? he said.
This year can be said to be a comeback year for agriculture. Minerals enjoyed a bull market roughly three years prior to agricultural commodities. Now, it is the turn of agriculture, he added.
Palm is the only oil that does not face any production problems, and is in fact, coming to the rescue of consumers. ?We have seen a new high production cycle commence from September 2007. This has rescued the production statistics for 2007 and helped to re-build palm stocks,? he said.
Most people expect CPO production to expand by 1 to 1.5 million tonne in Malaysia in 2008 and by 2 to 2.5 million tonne in Indonesia.
?I believe the outlook for soybean oil is the most bullish in the vegetable oil complex. With normal weather, we can see crude degummed soybean oil climb for new crop May/ June/ July positions to $1,500 a tonne FOB and retain that level. On the other hand, in the event of adverse weather, soybean oil will go to $1,800 FOB, he said.
He forecast soybean Chicago price to go to $16 per bushel. Eventually, soybeans may climb to between $18 and $20 per bushel in the event of a weather scare.