24/03/2011 (Bangkok Post) - Retail prices of cooking palm oil will remain at 47 baht a litre despite the easing in raw material costs because of the fear of price fluctuations, says the National Palm Oil Policy Committee.

The Commerce Ministry earlier proposed a price cut of five baht a litre, in line with lower prices of raw materials.

The committee agreed the price would be maintained until all parties make sure the supply returns to normal and the issue will be considered again next week, said its chairman, Deputy Prime Minister Suthep Thaugsuban.

The government also plans to revise a request next week for refineries to buy 40,000 tonnes of crude palm olein (CPO) from domestic crushing factories under the subsidy scheme as it might not be necessary if palm nut production returns to normal levels.

Palm oil refineries have stopped buying CPO from domestic factories at 44.75 baht per kilogramme because of a rumour of a cut in the CPO price. The refineries submitted a letter to the committee seeking solutions while warning that confusion may cause price fluctuation.

Mr Suthep said the government would try to prevent price fluctuations through the Energy Ministry's demand for biodiesel production with fixed purchase prices for CPO.

He said that if CPO was 40-41 baht/kg, three to four baht higher than CPO in Malaysia, farmers could sell fresh palm nuts at around 6-7 baht a kilogramme.

Apichart Jongsakul, secretary-general to the Office of Agricultural Economics, projected the price of fresh palm nuts was likely to increase from its existing 4.80 baht a kilogramme with the committee's decision. Last week, the price dropped to 4.50 baht a kilogramme.

He said the production of domestic CPO was projected at 140,000 tonnes in March and 160,000 tonnes in April, reflecting a normal situation.