CPO seen to reach 13.6 million tones
StarBiz, Thursday, 15 July, 2004
By Hanim Adnan
MALAYSIA'S crude palm oil (CPO) production this year is forecast to range between 13.5 million and 13.6 million tonnes, almost similar or slightly above last year's output of 13.4 million tonnes, said Plantation Industries and Commodities Minister Datuk Peter Chin.
"We believe this projected production figure will continue to support firm CPO prices going forward," he told a press conference in Kuala Lumpur yesterday to mark his 100th day in office.
Malaysian Palm Oil Board director-general Tan Sri Yusof Basiron, however, cautioned that palm oil production this year could stagnate or even register slower growth due to down-cycle in the palm trees' biological yield and wet weather.
"This could be supportive of CPO prices," lie said, adding that demand for palm oil was expected to continue increasing due to the growing world population and greater awareness that palm oil could be used in both food and non-foodbased industries.
OilWorid had indicated that pahn oil supplies would be tighter this year with global output expected to grow only 3% year-on -year after a 10% jump last year.
Its forecast for next year, however, is for a 7% jump in output, driven by a recovery in Malaysia 's CPO production.
Malaysian Palm Oil Association chief executive M.R. Chandran, meanwhile, has indicated that the price of CPO still has potential to rise further in view of anticipated production shortfalls in major producers Malaysia and Indonesia amid continued demand for the commodity.
"I believe there is room for fur ther increases. Everything will depend on the production situation and the South American soya bean harvest."
Malaysia 's CPO production in the first six months of this year was lower than in the corresponding period last year. Indonesia , which is expected to produce 17 million to 11.2 million tonnes annually, will probably produce only 10.5 million tonnes this year.
Chin said his ministry would be comfortable if the CPO was traded at between RM1,400 and RM1,600 per tonne for the rest of the year.
"1 believe our palm oil producers can still maintain reasonable profit margins based on these prices," he added.
Yesterday, the CPO price for July South rose to RM1, 435 per tonne from RM1,420 on Tuesday.
In outlining his ministry's new direction going forward, Chin said the plantation sector should strive for higher efficiency and productivity through improved skill and management, better machinery and equipment, as well as-better quality seedlings and trees.
He said there was a need to set up more training institutions to ensure Malaysia would have a larger pool of skilled managers and supervisors in the plantation sector.
He also hoped to see more value adding through research and development, greater efforts towards improving product quality, strengthening of existing markets and penetration of new markets.
In addition, he said, Malaysia should go into new areas of growth such as biomass and mono-crop farming.
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