27/02/2009 (The Star Online) - Strategies such as oil palm replanting schemes and making the use of palm biodiesel compulsory in Malaysia will reduce crude palm oil (CPO) stockpiles and sustain its price at RM1,400 per tonne levels, said Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Yusof Basiron.

The growth in CPO production would fall to less than 5% this year from about 13% in 2008 as palm trees needed to “rest” after a year of high production, he said.

“These factors would curtail excess supply and maintain CPO price above RM1,400 per tonne as it would not be profitable for some of our producers to trade below this level,” Basiron said at MPOC’s seminar on Rebuilding and Improving Malaysia’s Export of Palm Oil (PRIME) yesterday.

Last year, CPO prices soared to a historical high of RM4,180 in March, but plummeted to a low of RM1,403 per tonne in November.

Palm oil stockpiles rose to a historical high of 2.3 million tonnes in November last year but had since reduced to slightly more than 1.8 million tonnes in January.

Plantations, Industries and Commodities Minister Datuk Peter Chin said the CPO price range of between RM1,400 and RM1,900 per tonne this year would be enough to sustain export earnings.

“If we are able to continue this sort of range this year, despite whatever global recession there may be, the palm oil industry will be able to provide Malaysia with the export earnings that it needs,” he said.

But Malaysia’s earnings from palm oil exports, which stood at RM65.8bil last year, were expected to drop this year due to the lower prices as well as lower exports, he added.

“Trend in earnings for CPO would be more clearer in June,” Chin noted.

PRIME is one of MPOC’s palm oil export promotion strategies aimed at encouraging exporters to penetrate new markets and introduce innovative product lines in order to develop new areas of business.