Cash in now on palmoil price rise, says Malaysian minister

Cash in now on palmoil price rise, says Malaysian minister

KUALA LUMPUR (AFP): The sudden sharp rise in palmoil prices is limited and producers should cash in now, Malaysian primary industries minister Lim Keng Yaik warned Saturday.

"Sell now. Sell forward .... This is good enough price. Sell whatever you have," Lim told reporters.

Malaysia, the world's largest palmoil producer, watched with dismay as the price plunged from a high of 2,377 ringgit (626 dollars) a tonne in 1998 to around 800 ringgit in mid-July.

But prices have risen sharply in the last two weeks and on Friday hit 1,180 ringgit a tonne, he said.

Lim predicted the upward price could last for about six months.

But he said that exporters and traders were too often waiting for prices to climb further before selling. "I appeal to them to sell forward," he said.

"The more they sell forward it will boost exports, reduce stocks and will spur price upwards."

Lim said the surge in price was due to the government's ability to cut crude palmoil stocks from 1.5 million tonnes to 1.05 million tonnes since January and forecasts of bad weather in other major edible oil producing countries like India and China.

The price had also been boosted in Malaysia by the replanting of old palmoil trees, he said.

"If 200,000 hectares are cut down by the end of the year, then some 600,000 of crude palmoil production can be withheld," he said.

Lim said 4,300 applications for replanting involving some 150,000 hectares (representing 75 percent of the target) have been received.

"I am afraid those who have applied might opt out now that the price has gone up," he said.

Under a programme to encourage the replanting of trees which are more than 25 years old, the government is providing a loan of 6,000 ringgit per hectare and a one-off 1,000 ringgit per hectare to smallholders and plantations.