El Nino May Lift CPO Futures Prices

KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Derivatives

Exchange will likely be traded at RM2,800 to RM3,200 per tonne after

July as the El Nino hot weather may result in a production shortfall in

the second half of this year, said international palm oil expert Dorab

Mistry.

Mistry, who is Godrej International head of vegetable

oil trading, expects the bullish sentiment in palm oil would run from

the second half of this year until the first quarter of next year.

He

told participants at the first day of the 21st Palm and Laurics Oil

Conference and Exhibition: Price Outlook 2010/2011 (POC 2010) organised

by Bursa Malaysia yesterday that CPO prices would be trading in the

range of RM2,600 to RM2,800 per tonne between March and July due to

high vegetable oil stocks.

“I believe the palm oil market has a

comfortable cushion of stocks for the next few months and this will be

supported by large soybean oil supplies from South America,” he said.

Datuk Azhar Abdul Hamid (left) showing some palm oil products to Tan Sri Bernard Dompok at the Sime Darby booth.

Mistry,

whose forecasts are keenly watched, had earlier said that price of CPO

could rise to RM2,800 to RM3,000 per tonne by the end of the first

quarter of 2010 on higher global demand.

Earlier, Commodities

CME Group managing director of agricultural products and services

Timothy J.Andriesen announced that the new US dollar-denominated palm

oil futures contract is scheduled to be launched in Kuala Lumpur on May

24 and in Chicago on May 23.

He said the US dollar-denominated palm oil futures contracts were expected to be traded on the CME Globex.

“It

is an outstanding development. I think it will increase the portfolio

of contract in the palm oil industry on a global basis,” adds Attunga

Capital Pty Ltd portfolio manager Phillip Pyle.

Meanwhile, Bursa

Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff

welcomed palm oil futures trading at the Indonesia Commodity &

Derivatives Exchange starting next month.

“We welcomed more competition because we like to see the profile of palm oil contracts to be raised internationally.

“We

are quite confident, however, that our CPO futures (FCPO) contract will

remain the global price benchmark for CPO and large proportion of

traders will still trade here due to our established track record of

almost 30 years.

“We are expecting similar growth of 33% in FCPO contracts this year,” he said.

The

Bursa Malaysia Derivatives Exchange recorded a 33% increase or four

million contracts in its FCPO contracts in 2009 compared with 2008.

At

the official launch of POC 2010, Plantation Industries and Commodities

Minister Tan Sri Bernard Dompok said Malaysia, the world’s second

largest palm oil exporter, is confident of surpassing its total palm

oil products exports in 2009 of RM49.59bil this year.

He said the average CPO price this year was expected be better than last year given increasing production and demand.

“The

country is expected to meet the 18.1 million tonnes in palm oil

production this year,” he added.Palm oil production in Malaysia stood

at 17.6 million tonnes last year.

Dompok said the value of palm

oil product export declined by 24.4% to RM49.59bil last year due to

lower average CPO price of RM2,244.50 per tonne compared with

RM2,856.08 per tonne in 2008.

“But, in the terms of quantity, exports of Malaysian palm oil products increased by 2.9% last year.”

Dompok

said the industry’s challenges included limited suitable land, labour

shortages and demand from global market for sustainably produced palm

oil.

Source : The Star by Sharidan M. Ali

Leave a Reply