THE STAR – Palm oil prices are likely to strengthen further as excessive rain in key producing countries curbs output, while demand increases for its use in food and biofuels, industry officials said.
Palm oil prices have climbed by around a fifth this month but are still trading far below an all-time high set in March. The expected spike in prices will add to the burden of consumers already hit by inflation triggered by the Russia-Ukraine war, but higher exports and lower production would help major palm oil producers Indonesia and Malaysia bring down inventories.
Traders said November shipments of crude palm oil to India, the world’s biggest importer, are being offered at USD976 per tonne inclusive of cost, insurance and freight.
January deliveries are being quoted at USD1,010 per tonne.
“But prices could move above USD1,100 if Indonesia decides to restore export levies, which is very likely,” said a Mumbai-based dealer with a global trading firm.
Indonesia’s decision to suspend export levies in July because of a buildup of stocks pulled down palm oil prices from the March high of about USD2,010 per tonne.
Despite this month’s rise in prices, palm oil trades at a discount of about USD400 per tonne to rival soyoil, the highest in a decade, the traders said.