12/01/2008 (The Bangkok Post) - The government plans to import 60,000 tonnes of crude palm oil to solve a supply shortage and hopes the measure will have a positive psychological effect on the industry.

The imports could help to delay a planned second increase in the retail price of cooking palm oil, by 6.50 baht a litre, from 43.50 baht. The price had been increased from 38 baht last month.

Yanyong Phuangrach, director-general of the Internal Trade Department at the Commerce Ministry, said it was still not clear if there was a shortage of palm oil. The latest check found 98,000 tonnes of crude palm oil in private warehouses, less than the 160,000 tonnes officials estimated the industry should have.

He said some manufacturers might be hoarding the oil to gain extra profits from volatile prices in recent months.

''We're going to have random inspections of all stocks of wholesalers and retailers to find the missing oil,'' he said.

Siripol Yodmuangcharoen, the ministry's permanent secretary, said on Thursday that authorities were considering banning palm oil exports if they detected a shortfall or hoarding.

Prices of crude palm have been increasing in recent years as demand from producers of biodiesel grows. Selling prices are currently 37 baht a kilogramme, up from 31 baht in December and 29 baht in November.

The price has been more stable at around 32 baht a kilogramme n Malaysia, the world's largest palm oil producer.

According to Mr Yanyong, the state-run Public Warehouse Organisation (PWO) would be responsible for importing palm oil, possibly from Malaysia and Indonesia, 20,000 tonnes at a time.

He also said that officials had not yet decided whether to ban exports of palm oil. Normally, about 100,000 tonnes of crude and refined palm oil are exported each year.

Local palm oil producers believe there is no raw material shortage but agree that imports would ease concerns.

However, they are wary of having imports overseen by the PWO as it lacks experience with the commodity, according to Wiwan Boonyaprateeprat, the secretary-general of the Thai Oil Palm and Palm Oil Association.

The Commerce Ministry should allow private refiners or crushing plant operators who understood the market to handle the imports, she said.

She said domestic supply was sufficient at 110,000 tonnes of crude a year, while demand was about 100,000 tonnes, of which 70,000 tonnes were for consumption and 30,000 tonnes for biodiesel.