17/03/2008 (Morden Ghana) - Consumers all over the world will be feeling the pinch of high food prices in 2008, with cooking oil now joining corn, wheat, and milk on the growing list of food inflation culprits.

Buyers worldwide continue to accept deliveries of palm oil in volumes larger than immediate requirements to stem the impact of the latest staggering surge in prices.

However, Ghana could not take advantage of this trend to make profit because the country could not produce enough to even meet the local consumption demand, an official of the Agric Ministry told CITY&BUSINESS GUIDE in a telephone interview in Accra last Friday.

In November and December last year, many buyers of palm oil had already finalized purchases for most of their requirements for the first three or four months of 2008.

Even though they may already have sufficient inventory, buyers in consuming countries are said to be opening lines of credit for more shipments.

Malaysia’s palm oil export shipments to key destinations such as China, U.SA., India and Pakistan have declined, cargo surveyors have estimated.

Thailand for instance plans to import 60,000 metric tonnes of palm oil in a bid to ensure sufficient domestic supply and help lower local palm oil prices, the Thai Palm Oil Association said last week.

“The imports would be a short-term measure to ease the domestic shortage of palm oil,” said the association.

Thailand requires 150,000 tons of palm oil a month in its stockpiles, but only about 100,000 tons are available this month, the association said.

Of the monthly stockpiles, 70,000 tons are used for cooking-oil production, 30,000 tons for bio-diesel production and 50,000 tons for its domestic security supply.

Growing demand for palm oil in Thailand is due to the government’s mandatory policy for all oil retailers to sell B2 diesel, a mix of 2 percent palm oil and 98 percent petroleum diesel, and this has resulted in a shortage of palm oil and high prevailing prices.

Rising food prices will hurt more in developing nations including Ghana, where a larger share of incomes are spent on food, and analysts have warned of likely food shortages and political upheavals in impoverished areas.

Consumers are already paying more for cooking oils and prices of processed and fried foods and those made from edible oils such as salad dressings and condiments will also be rising in the months ahead, economists said.

Soybean oil prices were near 33-year highs while palm oil prices set all-time highs last Wednesday amid tightening global supplies and rising demand. Soaring energy costs, with crude oil approaching the $109 a barrel mark, yesterday have helped fuel the rise by lifting demand for alternative fuels, which are made from cheaper vegetable oils.

Volatile markets have also drawn speculators to palm and soy oil markets which, like crude oil, are viewed as a solid hedge against inflation and a historically weak U.S. dollar.

Global food prices have been rising for months, boosted by 10-year highs in corn prices early this year and all-time highs milk and wheat prices more recently.

Demand for cooking oil continue to rise despite the highest prices in a generation, although the recent rate of demand growth has slowed somewhat.

Russia is planning to cut import tariffs on some vegetable oils to combat rising consumer prices while market watchers expect China to follow suit soon.

Major industrial consumers have recently been buying hand-to-mouth, hoping vegetable oil prices will fall.

High prices will encourage more production, but farmlands are limited in many areas and competition from other high priced crops like corn and wheat will be fierce, economists said.

U.S. farmers are expected to plant far more soybeans next spring to capture high prices and to rotate away from the large number of acres devoted to corn in 2007.