21/05/2010 (Lankan Business Online) - A Sri Lankan business group with palm oil plantations in east Asia has said demand for the edible oil is likely to grow, driven mainly by China and India, with prices having stabilized at more realistic levels.

The Carson Cumberbatch group controls palm oil plantations in Indonesia and Malaysia through the Singapore-based Goodhope Asia Holdings under which comes four Malaysian plantation firms, Indo- Malay, Selinsing, Good Hope, and Shalimar Malay.
Most of the group's oil palm estates in Malaysia are relatively young having yet to reach peak yields as a result of replanting done in previous years.

The group also controls an Indonesian property, PT Agro Indomas, a company with a land area of 26,273 hectares of which 19,944 hectares are under cultivation in Central Kalimantan province.

The estates in Malaysia are smaller, with each firm holding less than 500 hectares.

Demand for palm oil will grow as consumer spending power increases and the industrial sector recovers, Hari Selvanathan, chairman of Shalimar Malay, told shareholders in the firm's annual report for the year ending March 31, 2010.

"Palm oil prices, which were subject to extreme fluctuations during the previous year, stabilized during the year under review moving within a comfortable price range, reflecting similar trends witnessed in other commodities.

"We feel that the current price levels are more representative of the fundamentals of the vegetable oil industry, reflecting prevalent supply and demand dynamics and seldom based on speculative forces, although external market forces did influence prices at times."

Selvanathan, who is also Carson Cumberbatch deputy chairman, said demand for palm oil from both the edible and non-edible markets is expected to grow in the coming years.

Palm oil is used for cooking as well as a fuel for vehicles.