Palm oil prices are poised to rise “sharply” next year as demand remains robust amid potential supply disruptions from El Nino, according to Dorab Mistry, director of Godrej International Ltd.
“Production has peaked this year and we’re entering the seasonal low-production period,” Mistry said in an interview in Bali, Indonesia today. “The bigger concern is the coming El Nino, which will affect production in the second half of 2010.”
Consumption in China and India, the two biggest importers of edible oils, is increasing and “rising from an already high base,” Mistry said. Godrej is the biggest edible oils supplier to India. Indonesia and Malaysia produce about 90 per cent of the world’s supply.
Mistry, who correctly predicted last month that palm oil futures would reach RM2,400 a metric ton by the first quarter of 2010, said prices may even climb as high as RM3,000 by the end of next year if crude oil advances to US$100 a barrel. He will issue another price forecast on Dec. 4, he said.
The most-active contract closed at a 15-week high of RM2,495 yesterday and traded at RM2,490 at the 12:30 p.m. trading break on the Malaysia Derivatives Exchange. Palm oil, used in cooking and fuel, has climbed 47 per cent this year as crude oil gained 76 per cent and rains and freezing weather threatened harvesting of the soybean crop in the US, the biggest producer, potentially reducing output of rival soybean oil. — Bloomberg Source : Business Times]]>