Business

Thursday March 7, 2013

Record palm oil stocks take centre stage in meeting

By HANIM ADNAN
nem@thestar.com.my


KUALA LUMPUR: Hot issues ranging from the record high palm oil stocks in the world’s top-two palm oil producing nations, Indonesia and Malaysia, to increasing global crude palm oil (CPO) production hogged the limelight at the two-day 24th Annual Palm and Lauric Oils Conference and Exhibition: Price Outlook 2013.

Other issues highlighted at the event, which ended yesterday, were cutbacks in the biofuel subsidies in the Western countries, drawbacks in biofuel mandates in Europe, export duties in India and China’s Inspection and Quarantine Bureau requirements.

In fact, prominent palm oil industry experts such as Godrej Industries Ltd director Dorab Mistry, Indonesian Palm Oil Board (IPOB) chairman Derom Bangun, LMC International Ltd chairman Dr James Fry, Chinatex Grains and Oils Import Export Co Ltd chief economist Jianfei Xui and ConsiliAgra managing director Emily French were put to the test at the POC 2013 panel discussion.

Most interesting was perhaps seeing Derom of IPOB fielding the question on Indonesia’s continued inefficiency in providing the exact data on the republic’s palm oil stocks, production, both oil palm planted area and mature hectarage compared with the timely, efficient and transparent way the Malaysian Palm Oil Board (MPOB) comes out with its palm oil statistics every month.

According to Derom, the IPOB, despite its similarity in name to MPOB, did not have a similiar role to the MPOB.

Currently, industry players, traders and market analysts alike were having a tough time calculating the actual palm oil stocks in Indonesia. Derom, however, dismissed market talk that the Indonesian palm oil stocks could be as high as five million tonnes this year, maintaining that its inventory figure was projected to be in the region of between 3.3 million and 3.5 million tonnes.

“In fact, Indonesia is expected to surpass India as a major palm oil consumer at 9.2 million tonnes this year versus the latter’s 8.35 million tonnes,” said Derom, adding that the republic would see an increase in palm oil usage in food at 5.7 million tonnes, industrial (3.5 million tonnes) and biodiesel (2.4 million tonnes) in 2013.

On the CPO price outlook, he was bullish: “Prices will slowly but steadily move up to US$870 to US$900 per tonne by June this year and trade at US$900 to US$940 per tonne in the second half of 2013.”

However, he warned that negative advertisement and campaigns against palm oil should be watched and addressed seriously by palm oil producing countries, as otherwise, the price would weaken further.

Meanwhile, Mistry said Malaysia and Indonesia should do away with their respective palm oil export duties.

“I am personally against such export duties because it can kill the market. The two countries should sit down and find a solution for the oversupply situation for a level playing field rather than one country trying to take advantage of the whole situation by imposing lower export duties,” he opined.

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