Tokyo [Tuesday - May 19, 2009]Palm oil prices are likely to surpass RM3,000 per tonne as the world faces a shortage of vegetable oils, says Dorab Mistry, a leading palm oil analyst.
Mistry admitted that he was wrong to have been pessimistic about the palm oil price outlook in Kuala Lumpur a couple of months ago.
At that time, he had forecast prices falling to a low of RM1,500 per tonne in the second half of the year, believing that the global recession would eat into consumer demand.
"Dramatic changes have taken place. I was wrong. Food demand has gone up despite the global economic slowdown. It is now apparent there is tightness in supply of vegetable oils throughout the world, including palm oil," Mistry told Japanese edible oil consumers here at the Malaysia-Japan Palm Oil Trade Fair and Seminar yesterday.
"Soya crop plantings in Argentina and the US have come out lower than expected. Canadian rapeseed harvest is significantly less than previously and this has put Japan in head-on competition with China."
Mistry's views concurred with those of IOI Corp Bhd executive chairman Tan Sri Lee Shin Cheng, who had said last week that palm oil prices could heat up further and that traders could expect an explosive market.
Lee had said that prices were likely to soar past RM3,000 per tonne should Malaysia suffer a prolonged drought brought on by the El Nino weather phenomenon.
According to the Malaysian Palm Oil Board, the 4.5 million hectares of oil palm trees in the country produced only 5.08 million tonnes of crude palm oil in the first four months of the year. The output was 4 per cent less than a year ago.
The government data also showed that palm oil stocks had almost halved to 1.29 million tonnes at end-April from a record 2.27 million tonnes in November last year.
Like Lee, Mistry did not discount explosive prices in the palm futures market.
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