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| Palm oil to rise 7% in 4th quarter: Mistry |
| BS Reporter / Mumbai Nov 10, 2009, 00:06 IST |
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Palm oil prices may rise by close to seven per cent in the fourth quarter of the current year (April-March), following a revival in demand from the world’s two largest consumers, India and China, said Dorab Mistry, director of Godrej International in China.
“After a few weeks, as demand from China and India returns, I expect crude palm oil (CPO) futures to begin to rise and to attain my target of 2,400 ringgit ($709 per tonne) in the first quarter of 2010. I no longer expect CPO futures to decline to 1,900 ringgit and believe they have bottomed out at the recent low of 2,020 ringgit,” Mistry said.
The benchmark CPO contract for delivery in January trades dropped 20 ringgit to 2,226 ringgit ($659.36) per tonne on Monday on the Malaysia Derivatives Exchange. Inventories were 30 per cent above the 1.4 million tonnes needed for the industry’s processing and refining capacity. Traders believe stocks could rise further, as the seasonal uptick in output continues into November and exports slow down again.
Used mainly in cooking and fuel, palm oil climbed 33 per cent this year, as the commodity’s moderator, crude oil, gained 75 per cent. Further, rain and freezing weather threatened harvesting of the soybean crop in the US, the largest producer — soybean is the biggest substitute for it.
Mistry forecast crude oil prices to trade around $80 per barrel for the next few months and for the dollar to neither crumble nor to strengthen. The dollar will continue to trade around 1.50 against the euro, while the currency may move around 9,400 against the rupiah, he said.
On India, Mistry said the country’s growing vegetable oil demand would continue as the commodity continued to be available cheaply. The country’s vegetable oil consumption is estimated to rise further up to 15.5 million tonnes (MT), against the previous presumption of 15.1 mt. It was recorded at 14.93 MT and 13 MT in the past two years. Per capita consumption of vegetable oil is estimated to rise about two per cent to 13.1 kg, against 12.9 kg in the last year and 11.4 per kg in 2007-08.
Total production from domestic sources is estimated to rise 4.5 per cent to 6.9 MT in 2009-10. Inflation will start to become a problem for India from March onwards. Food prices are already quite high and these may lead to dissatisfaction with the government. Therefore, it appears unlikely that India will restore or impose any additional import taxes on vegetable oil, Mistry said.
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