22/8/2003 - PALM oil prices are expected to hover above RM1,300 a tonneuntil year-end as a result of strong demand from Europe and India.

Indonesian Palm Oil Producers Association (Gapki) chairman Derom Bangunsaid prices will keep fluctuating but will be on the strong side and willnot go below the RM1,300-a-tonne mark.

Palm oil prices were above RM1,400 a tonne in July and on Monday the pricewas RM1,389 a tonne. It will keep on fluctuating but I don’t think it willgo down that much because prices have already bottomed out, Derom toldreporters in Kuala Lumpur yesterday.

Derom was met on the sidelines of a roundtable talk on sustainable palmoil launched by Malaysian Palm Oil Association chairman and KumpulanGuthrie Bhd group chief executive Tan Sri Abdul Khalid Ibrahim.

Demand is still steady from markets such as Russia which bought a onemonth shipment of 44,000 tonnes early this year compared to 13,000 tonnesfor the whole of 2002.

He added that India’s domestic edible oils production this year is indeficit of more than one million tonnes due to harsh weather conditions,putting palm oil at an advantage over other edible oils such as soya,rapeseed and mustard.

Derom said Indonesia is also expected to produce 9.9 million tonnes ofpalm oil in 2003 compared to 9.2 million tonnes last year and exports willtouch 6.8 million tonnes from 6.3 million tonnes the year before.

This is due to many newly matured areas and young plantings planted ineither 1998 and 1999.

Derom said Malaysia in the meantime is expected to produce almost 14million tonnes in 2003 from the initial forecast of 12 million tonnes.This is because oil palm trees normally produce a lot more in the secondhalf of a year compared to the first half and Malaysia has alreadyproduced more than six million tonnes for the first half of 2003.

In spite of the rise in production for both Indonesia and Malaysia, demandis expected to rise in tandem, said Derom.

Malaysia and Indonesia are the world’s top two producers of palm oilrespectively jointly accounting about 80 per cent of the world’sproduction.

Malaysia last year produced 11.9 million tonnes of palm oil, of which 10.8million tonnes worth almost RM20 billion were exported to about 140countries