in the country, IOI’s price forecast is highly awaited by vegetable oil

traders and analysts around the world.

IOI executive chairman

Tan Sri Lee Shin Cheng said that he expected the group’s current-year

palm oil output to fall as much as 8 per cent to around 715,000 tonnes.

In the last financial year ended June 30 2009, IOI managed to squeeze

777,310 tonnes of palm oil from its 80-odd estates.

“I still

hold the forecast at between RM2,800 and RM3,000 per tonne because of

localised weather phenomenon like El Nino that affects output. There’s

also the labour shortage issue – workers come and go,” Lee told

reporters on the sidelines of the official opening of Hong Leong Bank’s

branch in Bandar Puteri Puchong, Selangor, yesterday.

At an economic conference two months ago, when palm oil was trading at

around RM2,400 a tonne, Lee said he was optimistic of prices trending

upward to between RM2,800 and RM3,000 a tonne.

The price did

rise to a high of RM2,700 a tonne, but has fallen rapidly in the last

four weeks.

When asked why, Lee replied: “The US dollar has

weakened against a stronger ringgit and that has dragged palm oil prices

(lower) to a certain extent.”

According to Bank Negara

Malaysia’s website, US$1 is at RM3.21 currently, from RM3.45 a month

ago.

Lee does not expect the palm oil price to continue

falling.

“Demand for palm oil is very strong all around the

world, especially traditional markets. Palm oil is the best vegetable

oil in the world. It is nutritious and far more flexible in its

applications,” he said.

Yesterday, third-month benchmark crude

palm oil on the Bursa Malaysia Derivatives market traded RM39 lower to

close at RM2,500 a tonne.