By : Claire Leow and Koh Chin Ling
Palm oil futures are forecast to rise as much as 19 percent in the next 12 months, as India and China buy more cooking oil and record petroleum prices bolster demand in Europe for substitute fuels, according to analysts.
"I see palm oil rising to $425 a ton," said Christine Salim, head of research at Samuel Asset Management, whose portfolio includes oil palm plantation companies like Astra Agro Lestari.
Prices of palm oil have fallen 3.4 percent this year in Kuala Lumpur to 1,340 ringgit, or $357, a metric ton, compared with a 16 percent gain in soybean oil in Chicago.
More than a third of palm oil imports are by China and India, where food companies typically blend edible oils in generic packaging, making it easier to increase the proportion of cheaper products. A recovery in prices would benefit companies like Astra Agro and IOI that have plantations in Malaysia and Indonesia, where 85 percent of the world's oil palms grow.
"There's growing demand in both India and China, and other parts of the world for palm oil," said Leo Tameeris, regional director for strategy at Noble Grain Asia. He said palm oil prices could exceed $400 a ton in the next year.
Palm oil for October delivery fell 4 ringgit, or 0.3 percent, to 1,340 ringgit a ton on the Malaysia Derivatives Exchange on Monday. Soybean oil for December delivery rose by 0.20 cent, or 0.8 percent, to 24.12 cents a pound on the Chicago Board of Trade.
Consumption of palm oil in China and India will rise 5.7 percent in the year ending September 2006, according to the U.S. Department of Agriculture.
In developed regions like the United States and Europe, per capita consumption of vegetable oils was about 50 kilograms, or 110 pounds, last year, while developing countries like China and India consumed 18 kilograms to 19 kilograms, relying on cheaper animal fats, said P.R. Thakore, vice president of marketing for Pan-Century Edible Oils, a trader in Malaysia.
Global per capita consumption will rise 16 percent in the next 10 years, he said.
In India, producers use soybean oil and palm oil for blending with mustard, peanut or rapeseed oil into edible fats like vanaspati or ghee. India is among the world's top producers of peanut oil and rapeseed oil.
Prices of some vegetable oils, including rapeseed, have risen because they are being used increasingly as an alternative to diesel fuel, which has become more expensive as a result of record world petroleum prices.
Europe plans to replace 2 percent of its fuel with bio-diesel this year, and as much as 5.75 percent by 2010, according to the European Parliament's Web site.
Demand in Europe for rapeseed oil as a fuel substitute has helped push up prices of rapeseed, or canola, by 5.3 percent to $287.10 a ton on the Winnipeg Commodities Exchange this year.
"Demand in Europe for bio-diesel is very strong," said Salim at Samuel Asset.
The pineapple-like fruit of the tropical oil palm may increase in importance as a motor-fuel additive because the trees yield more oil per hectare than other oilseeds, Thakore said. The palms produce 20 tons of oil per hectare, compared with about 2.3 tons for soybeans, he said.
An increase in prices would probably bolster the shares of plantation companies, said Jason Chong, a fund manager at UOB-OSK Asset Management in Kuala Lumpur.
"Palm oil stocks in Malaysia move very much in tandem with palm oil prices," he said. "The move toward bio-fuel in Europe will augur well for long-term fundamentals."
Palm oil futures are forecast to rise as much as 19 percent in the next 12 months, as India and China buy more cooking oil and record petroleum prices bolster demand in Europe for substitute fuels, according to analysts.
"I see palm oil rising to $425 a ton," said Christine Salim, head of research at Samuel Asset Management, whose portfolio includes oil palm plantation companies like Astra Agro Lestari.
Prices of palm oil have fallen 3.4 percent this year in Kuala Lumpur to 1,340 ringgit, or $357, a metric ton, compared with a 16 percent gain in soybean oil in Chicago.
More than a third of palm oil imports are by China and India, where food companies typically blend edible oils in generic packaging, making it easier to increase the proportion of cheaper products. A recovery in prices would benefit companies like Astra Agro and IOI that have plantations in Malaysia and Indonesia, where 85 percent of the world's oil palms grow.
"There's growing demand in both India and China, and other parts of the world for palm oil," said Leo Tameeris, regional director for strategy at Noble Grain Asia. He said palm oil prices could exceed $400 a ton in the next year.
Palm oil for October delivery fell 4 ringgit, or 0.3 percent, to 1,340 ringgit a ton on the Malaysia Derivatives Exchange on Monday. Soybean oil for December delivery rose by 0.20 cent, or 0.8 percent, to 24.12 cents a pound on the Chicago Board of Trade.
Consumption of palm oil in China and India will rise 5.7 percent in the year ending September 2006, according to the U.S. Department of Agriculture.
In developed regions like the United States and Europe, per capita consumption of vegetable oils was about 50 kilograms, or 110 pounds, last year, while developing countries like China and India consumed 18 kilograms to 19 kilograms, relying on cheaper animal fats, said P.R. Thakore, vice president of marketing for Pan-Century Edible Oils, a trader in Malaysia.
Global per capita consumption will rise 16 percent in the next 10 years, he said.
In India, producers use soybean oil and palm oil for blending with mustard, peanut or rapeseed oil into edible fats like vanaspati or ghee. India is among the world's top producers of peanut oil and rapeseed oil.
Prices of some vegetable oils, including rapeseed, have risen because they are being used increasingly as an alternative to diesel fuel, which has become more expensive as a result of record world petroleum prices.
Europe plans to replace 2 percent of its fuel with bio-diesel this year, and as much as 5.75 percent by 2010, according to the European Parliament's Web site.
Demand in Europe for rapeseed oil as a fuel substitute has helped push up prices of rapeseed, or canola, by 5.3 percent to $287.10 a ton on the Winnipeg Commodities Exchange this year.
"Demand in Europe for bio-diesel is very strong," said Salim at Samuel Asset.
The pineapple-like fruit of the tropical oil palm may increase in importance as a motor-fuel additive because the trees yield more oil per hectare than other oilseeds, Thakore said. The palms produce 20 tons of oil per hectare, compared with about 2.3 tons for soybeans, he said.
An increase in prices would probably bolster the shares of plantation companies, said Jason Chong, a fund manager at UOB-OSK Asset Management in Kuala Lumpur.
"Palm oil stocks in Malaysia move very much in tandem with palm oil prices," he said. "The move toward bio-fuel in Europe will augur well for long-term fundamentals."
Palm oil futures are forecast to rise as much as 19 percent in the next 12 months, as India and China buy more cooking oil and record petroleum prices bolster demand in Europe for substitute fuels, according to analysts.
"I see palm oil rising to $425 a ton," said Christine Salim, head of research at Samuel Asset Management, whose portfolio includes oil palm plantation companies like Astra Agro Lestari.
Prices of palm oil have fallen 3.4 percent this year in Kuala Lumpur to 1,340 ringgit, or $357, a metric ton, compared with a 16 percent gain in soybean oil in Chicago.
More than a third of palm oil imports are by China and India, where food companies typically blend edible oils in generic packaging, making it easier to increase the proportion of cheaper products. A recovery in prices would benefit companies like Astra Agro and IOI that have plantations in Malaysia and Indonesia, where 85 percent of the world's oil palms grow.
"There's growing demand in both India and China, and other parts of the world for palm oil," said Leo Tameeris, regional director for strategy at Noble Grain Asia. He said palm oil prices could exceed $400 a ton in the next year.
Palm oil for October delivery fell 4 ringgit, or 0.3 percent, to 1,340 ringgit a ton on the Malaysia Derivatives Exchange on Monday. Soybean oil for December delivery rose by 0.20 cent, or 0.8 percent, to 24.12 cents a pound on the Chicago Board of Trade.
Consumption of palm oil in China and India will rise 5.7 percent in the year ending September 2006, according to the U.S. Department of Agriculture.
In developed regions like the United States and Europe, per capita consumption of vegetable oils was about 50 kilograms, or 110 pounds, last year, while developing countries like China and India consumed 18 kilograms to 19 kilograms, relying on cheaper animal fats, said P.R. Thakore, vice president of marketing for Pan-Century Edible Oils, a trader in Malaysia.
Global per capita consumption will rise 16 percent in the next 10 years, he said.
In India, producers use soybean oil and palm oil for blending with mustard, peanut or rapeseed oil into edible fats like vanaspati or ghee. India is among the world's top producers of peanut oil and rapeseed oil.
Prices of some vegetable oils, including rapeseed, have risen because they are being used increasingly as an alternative to diesel fuel, which has become more expensive as a result of record world petroleum prices.
Europe plans to replace 2 percent of its fuel with bio-diesel this year, and as much as 5.75 percent by 2010, according to the European Parliament's Web site.
Demand in Europe for rapeseed oil as a fuel substitute has helped push up prices of rapeseed, or canola, by 5.3 percent to $287.10 a ton on the Winnipeg Commodities Exchange this year.
"Demand in Europe for bio-diesel is very strong," said Salim at Samuel Asset.
The pineapple-like fruit of the tropical oil palm may increase in importance as a motor-fuel additive because the trees yield more oil per hectare than other oilseeds, Thakore said. The palms produce 20 tons of oil per hectare, compared with about 2.3 tons for soybeans, he said.
An increase in prices would probably bolster the shares of plantation companies, said Jason Chong, a fund manager at UOB-OSK Asset Management in Kuala Lumpur.
"Palm oil stocks in Malaysia move very much in tandem with palm oil prices," he said. "The move toward bio-fuel in Europe will augur well for long-term fundamentals." (mes)
Source : http://www.iht.com
WEDNESDAY, AUGUST 10, 2005
EN
