12 July,2004 - CRUDE palm oil (CPO) prices are likely to hold at thepresent level of RM1,500 per tonne as it is now trading at a discount ofUS$190 (US$1 = RM3.80) per tonne to Chicago Board of Trade (CBOT) soyaoilfutures, said outgoing president of the Malayan Edible Oil Manufacturers’Association (Meoma) James Goh Ju Tong.

Goh said tight US soyabean supply, coupled with strong soyabean demandfrom China, had resulted in lower US soyabean stocks.

He said the US soyabean stocks are projected to hit a 27-year low at 103million bushels, or 2.8 million tonnes, by end August of this year.

Soyaoil futures on the CBOT rallied to a 19-year high on March 22 thisyear at 35.05 US cents per lb on fund-buying and fears of a shortage insoyabean supply, but collapsed in early May when Chinese soyabean crushersfailed to open letters of credit and the non-issuance of import permits bythe Chinese Quarantine Department, he said.

CPO prices, lifted by strong soyaoil prices, hit a 62-month high atRM2,030 per tonne on April 5 which was much higher than the cooking oilstabilisation threshold price of RM1,450 per tonne. However, prices easedoff when the demand on palm oil from China and India slowed down.

Goh said poor palm oil demand from China and India had depressed CPOprices and the Malaysian Palm Oil Board (MPOB) June 2004 average price ofCPO was estimated at RM1,548.50 per tonne.

However, the MPOB monthly average price for refined, bleached anddeodorised (RBD) palm olein for the same month was at RM1,670.10 pertonne, only RM121.60 per tonne above the CPO price.

Our members which were cooking oil manufacturers were facing the dilemmaover cooking oil subsidy as the MPOB monthly average price for CPO in June2004 was above the threshold price of RM1,450 per tonne, but the MPOBmonthly average price for RBD palm olein for the same month was belowRM1,700 per tonne level, Goh said at the association’s 44th annual generalmeeting (AGM) in Kuala Lumpur on Saturday.

Goh said local palm kernel oil trading is expected to remain in a volatilecondition as the tight supply on nearby positions still persists.

However, he added that the forward months were still trading at a hugediscount to nearby deliveries.

The excess crushing capacity will not benefit the crushers. I would liketo urge our member to work on a certain processing margin when sourcingfor the palm kernel supply, he said.

At the AGM, Meoma members elected senior general manager of Felda KernelProducts Sdn Bhd, Shaharuddin Tegoh, as the association’s new president toreplace Goh.