Palm oil prices may fall to RM1,500 on weaker crude: top analyst

Thursday, 12 March 2009 14:14
Malaysian crude palm oil futures may fall back to RM1,500 ($622) by July, felled by slow demand and lower crude oil prices, a top industry analyst said today.
“We would be set for a soft landing, with BMD futures settling in the RM1,400–1,500 range, that is on trend,” James Fry, chairman of commodities consultancy LMC International, said in a speech in Kuala Lumpur.
Earlier, Fry told Reuters that Malaysian crude palm oil prices would probably drop at least 10% in the next six months as a worsening global recession cuts into food and fuel consumption.
Crude oil rebounded towards US$43 a barrel today after a 10% fall in the past two sessions on bearish data for the US and China, the world’s two largest oil consumers, and ahead of Opec’s meeting this weekend.
The benchmark May palm oil contract on Bursa Malaysia Derivatives Exchange were trading down 0.8% at RM1,965 per tonne by 12:16pm.
Malaysian palm oil inventories would fall towards 1.5 million tonnes but this was largely seasonal, due to the decline in production, Fry told a palm industry meeting. “The underlying stock output trend is not expected to be particularly tight,” he added.
Malaysian crude palm oil stocks fell 15% in February to a 16-month low, a drop that was bigger than traders had expected, as production of the vegetable oil declined faster than the drop in exports, data showed on yesterday.
Inventories fell to 1,561,151 tonnes, according to data from official crop agency Malaysian Palm Oil Board (MPOB), deeper than the 8.6% fall to 1.67 million tonnes forecast in a Reuters poll.