Government approves B4 price increase for palm oil
29/01/2008 (The Bangkok Post) - Bowing to complaints from refiners about rising raw material prices, the Internal Trade Department yesterday approved an increase in cooking palm oil prices by four baht per litre. Yanyong Phuangrach, the department's director-general, said the price would be raised from 43.50 baht per one-litre bottle to 47.50 baht to reflect rising costs of processors.
The increase was half what operators had been seeking. They proposed a hike of 8.59 baht to 52 baht per litre.
According to Mr Yanyong, the local shortage of palm oil, as well as price pressure, were expected to ease now that the Commerce Ministry has allowed imports of 30,000 tonnes of crude olein by the end of next month.
In fact, prices began falling after the import plan was confirmed two weeks ago. Local prices paid by producers for fresh palm nuts have declined to 5.80 baht a kilogramme from 6.80 baht earlier in the month. Crude palm-oil prices have also declined from an average of 38-39 baht a kilogramme to 34 baht.
The palm oil industry is facing major challenges because of fast-rising demand for palm oil to produce B100 (100% biofuel) to make B2 biodiesel, a blend of 2% biofuel and 98% diesel. Authorities are adamant that B2 will replace all conventional diesel.
Shortages of palm oil have also hit consumers at the checkout counter, with two price increases for cooking oil in the past two months.
The department has allowed palm oil prices to rise by 5.50 baht per litre since late last year, while soybean oil prices were raised by a total of 4.50 baht to 45.50 baht during the period.
However, for soybean oil the department has yet to review any further price-increase requests, said Mr Yanyong.
Cement and steel producers have also been pressing the department for permission to lift prices. Mr Yanyong said ministry officials would inspect cement and steel stocks next week.
He said contractors had been complaining that middlemen were selling steel and cement above the set prices, with some alleged to be hoarding the products.