PALM OIL STILL CHEAPER AMONG MAJOR COMPETING VEGETABLE OILS, SAYS MPOC

From Tengku Noor Shamsiah Tengku Abdullah

CAIRO, Nov 15 (Bernama) -- Despite high crude palm oil (CPO) price, the
commodity is still competitive vis-a-vis major competing vegetable oils in the
world like soyoil, sunflower and rapeseed, says a senior official of the
Malaysian Palm Oil Council (MPOC).

MPOC deputy chief executive officer Dr M. Kalyana Sundram said it was not
just palm oil price that has increased but prices of all other vegetable oils
and fats have also spiralled in tandem.

"Though palm oil and soyabean prices have increased, the price difference
between the two edible oils has been maintained," he told Bernama at the just-
concluded Malaysia-Egypt Palm Oil Trade Fair and Seminar 2010 (POTS Egypt 2010).

Dr Kalyana Sundram said though the palm oil price hike might result in some
pressure on end-users, it would not be easy for them to switch overnight.

Despite the higher price, Dr Kalyana Sundram said the dedicated palm oil
users would continue to use the commodity.

"After being engaged in palm oil trading or having used palm oil for more
than 30 years, the end-users understand the oxilation that happens in the
marketplace.

"They know the price fluctuations that occur over a cyclicle period are to
be anticipated and despite that they will continue to use palm oil.

"Despite all said and done, you will see palm oil is still being featured as
the cheaper oil among other major competing oils," he said.

Research houses, OSK Research and ECM Libra, have been reported as saying
that "demand destruction" would start if CPO prices soar excessively high.

Currently, CPO price is hovering at RM3,000 (about US$959)a tonne.

OSK said the price upside is expected to be between RM3,300 and RM3,500 a
tonne while ECM Libra said if the CPO price touched RM4,000 a tonne, a
"pullback" in demand could happen.

This scenario was seen in 2008 when high CPO prices proved
counter-productive to demand and as a result, stock levels ballooned to an
all-time high of almost 2.3 million tonnes, triggering a price decline.

On the POTS Egypt 2010 from Nov 7 to 9, Dr Kalyana Sundram said the event
was a continuous effort by MPOC in collaboration with the Malaysian Palm Oil
Board (MPOB) to enrich the knowledge on palm oil among end-users.

The POT Egypt 2010 opened by MPOC chairman Dr Lee Yeow Chor was the 17th
series of Palm Oil Trade Fair and Seminar organised at international level.

"The event is gaining increasing recognition with overwhelming response from
participants. In the past, there were only 200 participants, but at the POTS
Egypt 2010, we had 270 attendees. So, there is keen interest in the event," said
Dr Kalyana Sundram.

He said the programmes were structured in such a way that they comprised
subject matters most relevant to the market that MPOC was targeting at.

"In Egypt, we need to tell them about the situation in the palm oil
industry, the production cycles in Malaysia, our palm oil exports and the
issues we faced with the anti-palm oil campaigners.

"There were also working papers presented specifically for the
Egyptian palm oil market. International palm oil experts like Dr James Fry, the
managing director of LMC International Ltd, were invited to speak on issues
confronting the palm oil industry like pricing and related matters.

"This is because we want to give a rounded message to our end-users with
the hope that they will continue to look up to palm oil as the most sustainable
and affordable source of edible oil and the raw material for many of the food
formulations.

"As Egypt is an important staging point for the re-export of palm oil to the
Middle East region, we hope with this kind of information, palm oil industry
players in Egypt will think on a wider perspective to export palm oil to Middle
East countries, he said.

Dr Kalyana Sundram said this has been facilitated by some of the trade
agreements which Egypt has signed with the countries in the region.

He said palm oil direct exports from Malaysia would probably incur higher
tax than re-exporting from Egypt after being processed and packaged.

"With the processing cost, it is still more economical to use Egypt as the
transit point to export palm oil to the Arab world," added Dr Kalyana Sundram,
who is also MPOC's director of science and environment.
-- BERNAMA


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