06/06/2011 (Bangkok Post) - The retail price of palm cooking oil will remain at 47 baht a litre at least through this month even though supplies are now ample and costs are falling.

The government is committed to subsidising refiners for high costs incurred earlier, while palm farmers have yet to recoup all the losses they incurred earlier in the year, said Deputy Prime Minister Suthep Thaugsuban, who chairs the national palm oil policy committee.

Refiners will receive a subsidy of 1.79 baht a litre until the end of June, he said. However, they must pay 36.28 baht a litre for crude palm olein to crushing plants, which must buy palm nuts for at least six baht a kilogramme.

Many planters were not receiving the guaranteed six baht per kilogramme, said Mr Suthep, who represents Surat Thani, a major palm-growing province.

Provincial governors have been ordered to monitor transactions to ensure the committee's decision is enforced.

Mr Suthep said the committee would meet again in 10 days to consider a longer-term policy for the oil palm industry. It could be liberalised or partially controlled to ensure minimal impact on consumers from supply disruptions.

The high retail price does not reflect prevailing ample supplies, which had pushed down retail prices to 42-44 baht a litre over the past few weeks.

Palm nut and crude palm oil prices soared earlier this year after output plunged in the aftermath of severe flooding in late 2010. The cooking oil disappeared from many store shelves because producers refused to absorb high losses from supplying the product at a capped price they said was too low.

Commerce Minister Porntiva Naskhasai last week argued for a retail price of 42 baht, considering the cost of nuts was now 4-5 baht a kilogramme, down from 8-10 baht early this year.

Her comment irritated Mr Suthep, who said he didn't know why she suggested cutting retail prices since she was a member of the committee that approved keeping the 47-baht price.

He said the current market was still volatile with strong prices in Malaysia.

Wiwan Boonyaprateeprat, secretary-general of the Thai Oil Palm and Palm Oil Association, said 47 baht was an appropriate price, noting that in Malaysia it was the equivalent of 50 baht.

Apichart Jongskul, secretary-general of the Office of Agricultural Economics, said world prices were expected to rise this month because of high demand in Europe, Bangladesh and India.

However, local stocks of crude palm olein were healthy at 156,000 tonnes last month, he said.

The office also estimated 160,000 tonnes a month of crude palm olein would enter the market in May and June, and 130,000 tonnes in July.

Thailand's output of palm nuts is forecast at 8.9 million tonnes this year, up from 7.9 million the year before when drought curbed production.