NEW DELHI (Commoditiescontrol) -Malaysian palm oil prices are expected to rise to 2,700 ringgit per tonne (USD 690) by June this year buoyed by strong world economic growth and higher demand, leading industry analyst Dorab Mistry said on Tuesday.
In January, Mistry saw palm trading in a range of 2,500 ringgit and 2,700 ringgit until August.
"In a year of strong worldwide growth, you cannot be bearish (on) commodities,” said Mistry, a director of Indian consumer goods company Godrej International, speaking at an industry conference in Kuala Lumpur.
"If worldwide growth exceeds 5 percent, outlook gets more bullish", Mistry said.
Palm oil futures traded on the Bursa Malaysia Derivative Exchange closed at 2,463 ringgit a tonne on Monday, having risen around 2.5 percent in February after declining for three straight months previously.
However, palm prices have fallen about 4 percent this month after top buyer India increased import duties, triggering concerns of a reduction in appetite for the oil used in everything from cooking oil to shampoo.
He also trimmed his production estimates for top growers Indonesia and Malaysia by 500,000 metric tonnes each to 37.5 million tonnes and 20.5 million tonnes, respectively. Last year, Indonesia produced 36 million tonnes of palm oil and Malaysia’s output was 18.86 million tonnes, according to the US Department of Agriculture data.
Crude palm oil prices in Rotterdam may rise to $750 a tonne, he said.
In an alternative bullish scenario, oil palms could suffer tree stress as haze returns to Southeast Asia this year, leaving Malaysian output unchanged in 2018 and Indonesia2n production up by just 2 million tons, Mistry said. Consumption of an extra 1 million tons of palm-biodiesel in Indonesia could be a game changer, he added.
In that scenario, combined stockpiles in the two countries could be well below 4.5 million tons, or even nearer to 4 million tons, by July, Mistry said. Although such “fireworks” aren’t expected, Rotterdam prices of crude palm oil may reach $800 a tonne, he said.
High import duties on palm oil in India is a temporary solution, Mistry said, adding that it would be better to cut taxes on crude palm oil to 34 percent. That would widen its spread to refined, bleached and deodorized olein and lead to a big increase in refining activity. Still, inflation may soon be a problem for India and the import taxes may fall by May, he said.
India, the world’s biggest vegetable oil importer, expected to purchase 15.9 million tonnes of edible oil in 2017/18 compared with 15.44 million tonnes a year ago, Mistry said.
South Asia’s edible oil imports are set to climb to an all-time high this year as lower production in the region coincides with rising consumption to drive buying of mainly palm and soybean oils from elsewhere, Mistry said.
(By Commoditiescontrol Bureau; 9582843581)
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