Godrej’s Mistry says palm oil may rise to $683 a tonne

Godrej’s Mistry says palm oil may rise to $683 a tonne
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First Published: Wed, Mar 14 2007. 01 46 PM IST
Updated: Wed, Mar 14 2007. 01 46 PM IST
By Claire Leow, Bloomberg
Kuala Lumpur: Palm oil prices may rise by more than a fifth to 2,400 ringgit ($683, Rs30,400) a tonne in the final quarter of the year, said Dorab Mistry, director at Godrej International Ltd, one of India’s biggest buyers of vegetable oils.
Rising demand for the commodity in foods and as a source of energy was driving the gains, said Mistry, who has been trading vegetable oils since 1976. The price may trade between 2,200 ringgit and 2,400 ringgit a tonne in the fourth quarter, he said.
Sales of palm oil, 85% of which is grown in Southeast Asia, have been surging in China and India, the world’s two most populous nations. The oil is used in foods and, increasingly, as an additive that is blended with regular fuels.
“China continues to be hungry and is boosting imports of oils and fats in general,” said Thomas Mielke, chief editor of OilWorld, the trade publication. Mielke is forecasting a price of as much as 2,250 ringgit in the second half.
The average palm oil price on the Malaysia Derivatives Exchange gained 11% in 2006 compared with a year earlier. The contract fell as much as 19 ringgit, or 1%, to 1,958 ringgit a tonne on 14 March, and traded at 1,961 ringgit half an hour past noon.
“In the year ending March 2008, food demand will increase 4 million tonnes due to strong economic growth worldwide,” said Mistry, who gave his forecast today at the Palm Oil Annual Price Outlook Conference in Kuala Lumpur. Growth was particularly strong in India and China, where economies were expanding 8-10% a year, he said.
The upper limit of Mistry’s forecast of 2,400 ringgit matches that given yesterday by Sabri Ahmad, chief executive officer at Golden Hope Plantations Bhd. Demand was expected to be more robust, with rising sales of biodiesel and increased shipments to India and China, Sabri said.
Mistry said growth in the global palm oil output would slow to 2 million tonnes in the year to March 2008, from about 2.5 million tonnes in the preceding 12 months. The lingering impact of drier-than-usual conditions in 2006 caused by the El Nino weather pattern would also affect output in Indonesia, he said.
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First Published: Wed, Mar 14 2007. 01 46 PM IST
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