07/03/2012 (The Star) - The palm oil price outlook for 2012 will take centrestage today on the last day of the Palm and Lauric Oils Conference and Exhibition (POC 2012).

Organiser Bursa Malaysia has lined up three experts, OilWorld ISTA Mielke GmBH executive director Thomas Mielke, LMC International chairman Dr James Fry and Godrej International Ltd director Dorab Mistry, to canvass their views.

The session on the palm oil price outlook will be chaired by Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron.

A plantation player told StarBiz on the sidelines of POC 2012 that the price outlook by the regular experts at the annual POC event had had great following over the years and that their price forecasts had been spot on many times.

“This year it will be no different,” he said. “The current concensus among market players and analysts is for average crude palm oil (CPO) futures to range between RM2,800 and RM3,300 per tonne this year.”

As it is, two speakers Carotino Sdn Bhd executive director U.R. Unnithan and BASF Personal Care and Nutrition GmBH vice-president Harald Sauthoff have forecast this year's CPO price would trade between RM3,100 and RM3,440 per tonne.

Many expect oil palm planters to continue to reap good profit margins should the CPO price stay above RM3,000 per tonne, given that the current cost of production among efficient planters is pegged at about RM1,200 per tonne.

Unnithan expects the CPO price to be within his forecast level of RM3,100 to RM3,300 per tonne this year, “if competitiveness with Indonesia (the major CPO producer) is re-established and crude oil hovers around US$100 to US$120 per barrel.”

He also pointed out that if the Malaysian Government did not address the current local duty disadvantage compared with Indonesia's low palm oil export duty scheme, Malaysia's closing palm oil stocks could increase to 2.6 million tonnes, thus putting pressure on CPO price to drop to possibly RM2,500 per tonne.

In another development, Unnithan, who is also the Malaysian Biodiesel Association vice-president, said the local biodiesel industry could only be revived through Government intervention to boost domestic consumption and create a level playing field with Indonesia.

He noted that Malaysia had started as a leader in palm-based biodiesel but now had lost its leadership to Indonesia, Thailand and Colombia.

“Duty differential disadvantage with Indonesia and Argentina has seriously affected the export market, while the slow pace of Malaysia's B5 (blending 5% biodiesel with 95% diesel) programme implementation has further dampened the local biodiesel production,” added Unnithan.

Last year, he said Indonesia exported 1.37 million tonnes of palm methyl ester (PME or palm biodiesel), or about 62% of its total production, by taking advantage of its duty structure while Malaysia's PME export was only 50,000 tonnes due to non-competitiveness.

Argentina, meanwhile, exported 1.6 million tonnes of soy methyl ester last year, or 73% of its total production.

On the status of the local biodiesel sector, he said: “We only produced 170,000 tonnes last year or 6% capacity utilisation, compared with the total installed capacity of 2.7 million tonnes from 23 biodiesel plants nationwide.”

Therefore, he said Malaysia would need to come up with a quick implementation strategy to counter Indonesia and Argentina's duty differential advantage, while the national B5 programme also needed to be accelerated.