THE current rise in palm oil price is mainly influenced by the bullish soybean market, which in turn is driven by the shortage of supply following unfavourable weather conditions in the United States, said Malaysian Palm Oil Board (MPOB) director-general Datuk Dr Yusof Basiron.
We are just taking a ride with soybean oil; it has nothing to do with our palm oil supply. As long as soyoil price is high, our palm oil price will follow, he told reporters when asked whether the current uptrend in palm oil price could be sustained.
Yusof was speaking in Bangi yesterday after a seminar on Lessons to be learnt from the Malaysian palm oil cost of production survey and proposals for strategic cost reduction measures organised by MPOB.
He said Malaysia's palm oil stockpile was about one million tonnes on the back of a production of 13 million this year. Last year the country's production only reached 11.9 million tonnes.
Yusof said the palm oil market was reacting to the poor supply of soyoil because it was the closest substitute.
So what is being projected now is, this poor performance of soya is still likely to prevail in the near future because land used for soya production is also used for cereal production, he said.
Therefore, he said, soya-producing countries were in a tight spot in terms of land distribution, as there was also a shortage of cereals like corn and wheat.
There is now pressure on land availability because stock is low for soya and cereals in producing countries. So the price in the market is dictated by the soya/cereal complex, Yusof said.
Disputing industry analysts' opinions on the current rise in palm oil prices, he said local palm oil was not overpriced because it was still cheaper after a discount of more than US$100 per tonne compared with soyoil.
At their close last Thursday, the benchmark January crude palm oil futures prices on the Malaysia Derivative Exchange was RM1,780 per tonne. Bernama