CPO prices could fall as cheaper oils used
CPO prices could fall as cheaper oils used
SINGAPORE (Bloomberg): Malaysia and Indonesia, the world's largest palm oil producers, could see prices for the commodity fall as technology allows use of other oils as substitutes, an industry consultant said on Friday.
Advances in genetic engineering will allow users to substitute palm oil with cheaper soybean and canola oil, pulling down prices of palm oil, said Alastair J. Dickie, director of Commodity & Financial Management (U.K.) Ltd., a commodities consultancy.
Malaysia, the world's biggest producer of palm oil, may have earned 21 billion ringgit (US$5.5 billion) from palm oil exports last year, an increase of 73.6 percent from 12.1 billion ringgit a year earlier. The country expects to produce about 9 million tons this year, up 8.4 percent from 1998.
Indonesia will likely raise palm oil output by 9.4 percent this year, which could further depress prices, after the world's No. 2 producer of the edible oil planted more of the crop.
"With production now estimated at 6.3 million tons, Indonesian exports of the oil will likely jump 11.5 percent this year to about 3.3 million tons," said Lalang Buana, research economist at the Indonesian Oil Palm Research Institute.
More of the oil on the market could push palm oil prices, lower after they fell almost 40 percent in six months. The oil, derived from the fruit of the oil palm tree, is used in cooking and as a natural ingredient in food, soaps, shampoos and cosmetics.