CPO price shoots to three-year high
CPO price shoots to three-year high
The Jakarta Post, Jakarta
The price of crude palm oil (CPO) hit a three-year high of about
US$415 per ton on Thursday due to rising demand, chairman of the
Indonesian Palm Oil Producers Association? (Gapki) Derom Bangun
said.
He added that a reduction in supply of sunflower oil, a
substitute for CPO, had increased demand for the latter
commodity.
"There has been a high demand in the market," he told The
Jakarta Post.
He estimated the price of CPO would continue to increase
further for the remainder of this month.
Derom explained that the price of CPO had been on the rise
since April when it stood at $350 per ton.
Meanwhile, AFP quoted traders as saying that edible oil
producers such as Brazil, Argentina, China, the U.S., Russia and
the European Union were expected to have smaller crops this
season, with a drop in the production of sunflower oil.
Market players have also attributed the rising prices to
increasing tension between India and Pakistan.
"The market is very excited now, and palm oil prices are
breaking record highs," said a dealer at a Malaysian brokerage.
"The situation has been uphill for the past one week to two
weeks, and will probably remain on its upward trend."
The rising CPO price in the international market could push
local producers to cater for the overseas market, which, in turn,
could cause a shortage at home and push up the price of cooking
oil.
Derom said that the tension between India and Pakistan had
nothing to do with the rising demand for CPO.
He added, however, that if there was an expectation that the
tension would continue for much longer, the two countries might
be forced to boost their stocks through increased purchases on
the open market.
Indonesia is the world's second-largest palm oil producer
after Malaysia, with a targeted output of 9 million tons of palm
oil this year, up from 8.3 million tons last year.
The anticipated increase is the result of the harvest from
trees planted between 1996 and 1998.
Meanwhile, total exports are also expected to rise to 5.5
million tons this year, from 4.9 million tons in 2001. Indonesia
is hoping to export some 1.6 million tons of CPO to India this
year, up from 1.5 million tons last year, while exports to
Pakistan will be relatively much lower, at about several hundred
tons.