Posted: 29 Oct 2014 06:42 PM PDT
KUALA LUMPUR: OIL palm planters were a little happier at the recently-concluded Palm Oil Trade Seminar (POTS) 2014 when experts gave hopeful outlook on palm oil prices.
Hamburg-based ISTA Mielke GmbH executive director Thomas Mielke started off his forecast of palm oil pricing by assuring planters not to be carried away by bearish sentiment. "Price recovery is fundamentally justified."
He explained that palm oil, which is mainly used for food, is increasingly influenced by petroleum prices as countries all over the world look to excess edible oils as substitutes to depleting fossil fuels.
"If crude oil prices were to fall to US$75 (or RM245.20) a barrel or lower, palm prices could drop, too. This would trigger the swing factor ... the demand in the energy sector that is not mandated," said Mielke.
With sustained demand for cooking oil and margarine from the global food industry, Mielke thinks palm oil prices are unlikely to drop below RM2,000 a tonne in the next couple of months.
He expects palm oil futures to climb further and trade between RM2,300 and RM2,500 a tonne by the first quarter of 2015.
Yesterday, the third month benchmark palm oil futures on Bursa Malaysia Derivatives gained RM50 to close at RM2,263 a tonne.
This year, world production of palm oil is likely to rise to a record high of 59 million tonnes from last year's 56 million tonnes.
Mielke, a well-respected and authoritative vegetable oil analyst, once again, rejected calls by green activists for a moratorium on oil palm plantings.
"The environmental activists like to pretend or dream of a world without palm oil. It would be terrible for consumers, especially those in developing countries where two thirds of the world population resides. The truth is, we cannot replace palm oil, at least not in large volumes," he said.
Jupiter Securities chartist Benny Lee said price recovery has already begun. "Palm oil prices are likely to be on the uptrend, supported by the strengthening of the US dollar and implementation of the B7 biodiesel mandate in the country."
Godrej International Ltd director Dorab Mistry was also optimistic when he said the worst is over. "Planters can look forward to better times. I think palm oil is likely to trade in a range of RM2,100 to RM2,300 a tonne in the next several weeks.
"In December, I expect futures to rise steadily as production declines begin to bite and stocks decline. However, given the current macro economic outlook, I do not expect a runaway bull market. I think prices are likely to appreciate to RM2,500 a tonne by March next year," he said.
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