28/3/07 (Business Times)  -  GOOD news for palm oil! A top palm oil industry official says global palm oil sales are set to rise due to the substantial reduction in soya oil production in the US.

Besides this, palm oil prices this year are expected to move at the current high level of between RM2,000 and RM2,200 per tonne, said Datuk Sabri Ahmad, in his maiden press conference today as the chairman of the Malaysian Palm Oil Board.

“The American farmers are definitely converting to (planting more of) corn in place of soya bean as corn can produce ethanol (biofuel) which is very profitable. The market is profit driven,” he said.

Therefore, the outlook for palm oil is good as there could be a reduction of soya oil in the market, globally, he said.

“If there is a reduction in soya bean oil in the world market, obviously palm oil is a good substitute,” he said.

Palm oil prices are also still at a discount to soya oil prices at about US$50 per tonne, which gives it a better chance of capturing the market, he said.

There are 16 types of oils in the market, but palm oil and soya oil which compete for the same market, cover the bulk of the global demand mainly for edible oils.

Currently, palm oil prices average RM2,000 per tonne, which is very good as it gives a substantial margin for the producers, including smallholders.

“The sustainability of CPO prices is very important, for example RM2,000 per tonne for the next five years (is better than) it being higher now and then collapsing later, which is not good for the industry,” said Sabri.

In Malaysia, there were 4.16 million hectares of planted oil palm in 2006, up by 2.8 percent from 4.05 million hectares in 2005. The CPO production increased to 15.88 million tonnes in 2006 from 14.96 million previously.

CPO prices also increased to an average of RM1,510.50 per tonne in 2006 compared with RM1,394 per tonne in 2005. — Bernama