15/03/2012 (Bangkok Post) - The government has decided against a cooking palm oil price increase requested by producers, but it may sell them cheap palm oil from reserves.

The goal is to keep the retail price below 42 baht a litre.

Commerce Minister Boonsong Teriyapirom said the government is considering the sale to producers of low-cost crude palm oil (CPO) currently held as reserves.

CPO production totals 230,000 tonnes a month. The cooking palm oil industry needs about 25,000 tonnes a month.

The measures taken will last only about a month and be temporary.

The new harvest season for palm nuts will start next month, after which prices will fall.

Mr Boonsong will seek permission from the cabinet next week for the measure.

The Thai Oil Palm and Palm Oil Association said the shortage of palm nuts has pushed up their price to 6.20 baht a kilogramme, from 4.80 baht in previous months.

This has resulted in CPO hitting 35 baht per kg, up from 29 baht.

Mr Boonsong said palm nut supplies are often low from November-March due to drought conditions, but the situation will improve.

The minister said the price of cooking palm oil will not spike like it did last year, when it vanished from the shelves and consumers had to pay as much as 60 baht for a litre of the oil.

Last year, reserves fell to 70,000 tonnes, but the situation is different now, as the amount of oil in reserve is relatively high, said Mr Boonsong.

"So don't panic or start hoarding," he told representatives of cooking palm oil producers and traders at a meeting yesterday.

Traders were also asked not to limit purchases during inspections. Officials conduct inspections to see if producers, wholesalers and retailers are hoarding.