CPO prices to range between RM2,600-RM3,000

KUALA LUMPUR: Malaysian Palm Oil Council CEO Tan Sri Dr Yusof Basiron forecasts the crude palm oil (CPO) price to trade between a range of RM2,600 to RM3,000 per tonne, as market factors in the current drought affect the palm oil industry.

Yusof noted that the palm oil prices would start to trend upwards as inventory had been falling, as other countries had been importing the tropical oil on the cheaper price.

“The drought and low stock levels consistently over the last six months (are causing the CPO prices to go up). People have been importing because of the cheaper CPO price, but now that the stock is not at a high level, we cannot continue to sell it cheap,” he said after a Roundtable session at the Palm & Lauric Oils Conference & Exhibition 2014.

In addition, February is typically the lowest yielding month for palm oil and that should push CPO prices higher.

As for the impact of the current drought on future harvests, Yusof said the effect would likely be seen some 24 months from now – in the January to February 2016 period.

“But the impact is short term because when the weather gets better, the palm trees will produce fresh fruit bunches again in the corresponding month two years from now,” he said.

On implementing bio-diesel fuel in Malaysia, Yusof said the B5 mandate should be effective nationwide this July. B5 consists of 5% biodiesel and 95% petroleum diesel.

“Once B5 can be implemented, it would mean our blending facilities (using in-line blending technology) are ready, so anytime we want to produce B7, we just push a button,” he said of biodiesel blends in the pipeline.

When asked if Malaysia would advance its biodiesel production to B20 like its neighbours, Yusof said it was unlikely as the main intention would still be the food industry.

“We have to be responsible in supplying our customers who need palm oil. Palm oil is mainly for food, not fuel, so we have to honour the supply and demand of our customers around the world.”