Palm oil must rise by as much as 24 per cent to cool export demand as
output declines in Malaysia, the second-biggest grower, and dry weather
damages canola crops in Europe and Canada, according to Dorab Mistry, a
director at Godrej International Ltd.
“The market needs to move ahead rapidly so that there is time for
rationing to set in,” Mistry, who’s traded vegetable oils for more than
three decades, said in an e-mailed reply to Bloomberg. “At RM2,600, you
cannot match demand with supply. And on top of that, the supply is
shrinking.”
Palm oil has rallied 13 per cent from a seven-month low on July 7 on
optimism consumption will increase in Asian nations, which mark
festivals in the September quarter, and on concern that weather may
disrupt output in Indonesia and Malaysia, the biggest producers.
October-delivery futures dropped as much as 0.7 per cent to RM2,571
(US$811) a ton on the Malaysia Derivatives Exchange and were at RM2,578
at 11:24 am Kuala Lumpur local time. The price gained 1.1 per cent to
RM2,590 yesterday, the highest close since April 9.
Palm oil may gain in the second half as dry weather caused by El Nino
pares output in Malaysia and Indonesia and the price may rise as high as
RM3,200 a ton after June, Mistry told a conference in Kuala Lumpur in
March.
Godrej is one of India’s biggest vegetable oil importers. — Bloomberg
