MARKET DEVELOPMENT
27-07-2001
Palm oil traders advised against hoarding stocks
Thursday, July 26, 2001 - PALM OIL traders have been advised againsthoarding stock in the hope that prices will further increase in the nearfuture as high production months are up ahead in September and Octoberthis year.According to Primary Industries Minister Datuk Seri Dr Lim Keng Yaik,although steps taken by his ministry over the last four months hadresulted in palm oil prices escalating to about RM1,200 a tonne, fromRM800, the downward trend could recur."Remember, whatever goes up can come down again," Lim said, adding thatwhile both palm oil and soya oil prices had increased recently, soya oilprices were still higher compared with palm oil's.Lim told reporters this after opening a seminar on medicinal and aromaticplants organised by the Forest Research Institute Malaysia in Kuala Lumpuron Tuesday.According to Lim, it is still possible for palm oil prices to climb higherby an additional RM200 to RM250 a tonne, placing their prices at the samelevel as that of soya oil in international markets.He said, however, that the current price discrepancy was testimony to thefact that palm oil had not been marketed aggressively enough."Plantation firms should also consider diversifying their activities toreduce dependence on a single crop," Lim said, adding that only a fewcompanies had taken up the call.According to Lim, mono-crop planters have in the past been advised towiden their scope of activities and look to cattle rearing or herbalplantation as a supplementary source of income.Unfortunately, he said, the plantation sector had proved to be veryconservative and preferred to "stick only to what they know best.""As Malaysia becomes a high-cost producer, owing to rising labour costs,plantation companies will have to think of other competitive ways to makefull use of the land and its natural resources," Lim said.Using the herbal market as an example, Lim said the herbal and aromaticmarket in Malaysia was valued at RM4.55bil but only 5% of the productsused were sourced locally because there was still the tendency to use oldtechnology which gave little added value to the product.
