PRICE CPO MAY GO UP RM3000 (USD 857)

MAY 13, 2009 20:51 GMT+8
IOI Corp says palm oil yields will drop 5%

NEWS SOURCE:

www.btimes.com.my
RELATED PALM OIL NEWS

Palm oil stockpiles expected to drop below 1.8m tonnes Goldman Sachs: Palm oil to drop halting plantation stocks rally Crude Palm Oil Futures Fall on Concern Demand May Drop IOI Corp likely to see weaker 2Q earnings Malaysian Palm Oil Stockpiles & Output Drop to Nine-Month Low IOI Corp, Malaysia’s No 2. planter, said palm oil yields would fall by 5 per cent due to a current warm spell and that might push prices to RM3,000 in the near term if there was an uptick in overseas demand.

Planters struggled to boost output in Malaysia last month and may continue to do so as oil palms also suffered biological stress after last year’s strong harvests and low fertiliser use, IOI executive chairman Lee Shin Cheng said. Malaysia, the world’s second largest palm oil supplier, achieved yields at between 4 and 5 tonnes per hectare in 2008, government data showed. IOI, regarded as one of the most efficient plantations in Malaysia, achieved a yield of 6.1 tonnes, company data showed.

Hot weather leads to higher oil extraction rates as there is less water contamination but yields dry up as fresh fruit bunches are smaller and do not fully develop, plantation officials and traders have said. “Weather will be a crucial factor. Already people are talking about a possible El Nino. The market will be very explosive if poor weather sets in during the second half of 2009,” Lee said in an e-mail interview late today.

“Prices may go higher if there is a strong uptick in demand. We will not discount that RM3,000 is achievable in the near term. The benchmark July contract on Bursa Malaysia’s Derivatives Exchange settled up RM64 at RM2,789 (US$793.7) per tonne on rising hot weather fears in Malaysia and rival soyoil producing South America. Palm oil output in Malaysia and top supplier Indonesia generally registers double-digit growth in the second half of the year, building up stocks for the Asian festival season when top buyers India and China lock in supplies from June or July onwards.

But China appears to have kicked off its buying spree much earlier this year, with a 41.3 per cent rise in May 1-10 palm oil purchases compared to a month ago, cargo surveyor data showed early this week. “Barring weather, it is likely that crude palm oil prices could be lower in the second half (due to higher production),” Lee said. But we still do not expect prices to decline a lot and they should remain comfortably above RM2,500.”

CPO PRICE MOVEMENT MAY'08 - MAY'09

CPO FUTURES HIGHER DUE TO LOW SUPPLY

MAY 13, 2009 3:00 GMT+8
Crude palm oil futures higher on supply concerns

NEWS SOURCE:

www.btimes.com.my
RELATED PALM OIL NEWS

Crude palm oil futures higher on output concerns
Profit-taking halts crude palm oil palm futures rally MPOB report will provide lead on crude palm oil futures Crude palm oil futures higher on technical rebound Crude palm oil futures hit by massive selling Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed higher yesterday on concerns over supply following the current hot and dry weather, dealers said.

A dealer said the hot spell would affect the yield of palm oil production. In this situation, he said Malaysia would be unable to yield double-digit production.
At the close, the CPO futures for May 2009 increased RM35 to settle at RM2,860 per tonne, the June 2009 contract rose RM55 to RM2,795 per tonne, July 2009 advanced RM65 to 2,725 per tonne and August 2009 gained RM65 to 2,670 per tonne.

The day’s volume declined to 13,619 lots from the previous day’s 20,202 lots while open interests rose to 78,354 contracts from 78,227 contracts earlier. On the physical market, May South increased to RM2,870 per tonne from yesterday’s RM2,850 per tonne.

LOW PALM OIL STOCK PRICES ON UP

Business Times -

[Friday - May 08, 2009]

Lower palm oil stock level likely to keep prices steady

Malaysian palm oil stocks stood at about 1.2 million tonnes yesterday, and this lower stock level is expected to keep crude palm oil (CPO) futures prices this year steady at between RM2,600 and RM2,800 per tonne. "The CPO futures prices will rise steadily. We will not see any big drop or spectacular rises like last year," Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said after a visit to the Malaysian Palm Oil Board (MPOB) office in Bangi yesterday. Dompok said he expected the benchmark CPO price to increase to RM2,700 per tonne in the next three months from a closing price of RM2,680 per tonne on Wednesday. Spot month May south region meanwhile ended at RM2,850 per tonne on Wednesday. Palm oil stocks in Malaysia have been showing a downtrend as the government initiated a replanting scheme to encourage planters to chop down oil palm over 25 years old, in order to stabilise the commodity's price. As at March 2009, palm oil stockpiles fell 13 per cent to 1.36 million tonnes from 1.6 million in February, the lowest level since July 2007. MPOB is due to release the inventory data for April next week "If there are any changes in the underlying demand or supply, then the price will move up. If the world economic situation keeps on improving, the markets will acquire more products from Malaysia, including palm oil," Dompok said. He said his ministry is aiming to increase the country's commodity exports between 20 per cent and 30 per cent from about 17 per cent currently, although in value terms it will be less. Last year, Malaysia's earnings from export of commodities were RM112.4 billion, up 26.75 per cent from RM88.70 billion in 2007. Dompok said the ministry is working to improve productivity per hectare yearly because of the limited availability of land in Malaysia, adding that only Sarawak can expect to increase acreages for planting oil palm. "What I am looking at now is how productivity can be increased. Malaysia has been developing land for oil palm, rubber and cocoa cultivation for a long time, we are the leading nation in these crops," he added. Dompok said in the oil palm sector the national average production was four tonnes of CPO per hectare per annum, adding that what is important now is improving the production. The ministry will also look at how the smallholders can be assisted to be more productive, as well as narrow the price differential in cost and commodities between the Peninsular and Sabah and Sarawak, he said. Asked whether the ministry is planning to review the blending ratio in biodiesel due to the high cost, Dompok said: "This is an area we will think about. I want to know the facts and figures and look at the economics of palm biodiesel." Currently, government vehicles are using biodiesel with the Envo Diesel Esther (B5) brand, a blend of 5 per cent palm oil and 95 per cent diesel. Using biodiesel will become mandatory for the transport and industrial sectors by January 2010. - Bernama