Palm oil prices unlikely to reclaim highs in Malaysia
Thursday, 12 March 2009
LUMPUR, Mar 11 (AFP): Palm oil prices are unlikely to reclaim last year's record levels any time soon, Malaysian conglomerate Sime Darby, the world's largest listed palm oil producer, said today.
Crude palm oil prices (CPO) plummeted from a peak of 4,312 ringgit (1,168 dollars) per tonne a year ago to a low of 1,390 ringgit in October last year. Prices have recovered somewhat to 2,047 ringgit per tonne currently.
"I believe that the future of the industry will always be bright although CPO prices may not repeat the historical high levels of 4,000 ringgit per tonne in the near future," managing director Azhar Abdul Hamid told a conference. "Based on recent analysts' comments on the mid-term outlook of CPO prices between 1,800 ringgit and 2,000 ringgit per tonne, most plantation companies should comfortably register a profit," he said.
Sime Darby last month announced a 65 per cent drop in second- quarter profits, recording a net profit of 278.5 million ringgit (75.79 million dollars) for the three months to December. The decline was attributed to weaker earnings contributions from almost all divisions, while the plantations division was hit by lower CPO prices and a drop in production. Azhar said he was confident that India and China will remain the world's top consumers in the long-term. "In terms of long-term market demand, China and India are still expected to have the largest oils and fats demand due to their strong combination of economic growth, massive urbanisation and huge, expanding populations with improved purchasing power," he said.
He also said Malaysia's mandatory usage of 5.0 per cent palm oil in biodiesel mix in government vehicles is expected to reduce approximately 500,000 tonnes of palm oil stock per year when it is fully implemented by 2010.
Crude palm oil prices (CPO) plummeted from a peak of 4,312 ringgit (1,168 dollars) per tonne a year ago to a low of 1,390 ringgit in October last year. Prices have recovered somewhat to 2,047 ringgit per tonne currently.
"I believe that the future of the industry will always be bright although CPO prices may not repeat the historical high levels of 4,000 ringgit per tonne in the near future," managing director Azhar Abdul Hamid told a conference. "Based on recent analysts' comments on the mid-term outlook of CPO prices between 1,800 ringgit and 2,000 ringgit per tonne, most plantation companies should comfortably register a profit," he said.
Sime Darby last month announced a 65 per cent drop in second- quarter profits, recording a net profit of 278.5 million ringgit (75.79 million dollars) for the three months to December. The decline was attributed to weaker earnings contributions from almost all divisions, while the plantations division was hit by lower CPO prices and a drop in production. Azhar said he was confident that India and China will remain the world's top consumers in the long-term. "In terms of long-term market demand, China and India are still expected to have the largest oils and fats demand due to their strong combination of economic growth, massive urbanisation and huge, expanding populations with improved purchasing power," he said.
He also said Malaysia's mandatory usage of 5.0 per cent palm oil in biodiesel mix in government vehicles is expected to reduce approximately 500,000 tonnes of palm oil stock per year when it is fully implemented by 2010.