oil prices are heading towards the RM3,400 mark by the second half of

next year on the back of a bullish run by vegetable oils in the global

market,

CIMB Group (1023)

trader-cum-technical analyst G.M Teoh expects prices to touch RM3,400

per tonne in the first quarter of 2011, but cautioned that it is

important to have prices at RM2,800 per tonne in the short term.

He was speaking at the Second International Conference on the Future of Palm Oil Business 2010 in Kuala Lumpur yesterday.

Murali Krishna of TransGraph Consulting in India shared the optimistic

CPO outlook, saying he was bullish on the market in the next four to

six months.

“The rising share of palm oil in total vegetable oil trade is evident

with soya and rapeseed oils finding their way into bio-diesel usage in

the US and the EU respectively.”

The turning palm-centric

trends of the world vegetable oilseed and oil production trends were

also due to the varying oilseed output levels at the “mercy of the

erratic weather” and unsustainable production growth.

He also

highlighted the growth potential of emerging markets and economic giants

like China and India which consume close to 64 per cent or 40 tonnes

of Asian vegetable consumption.

For instance, although the per

capita vegetable oil consumption has risen from 10 kgs to 14 kgs in

India and 18 kgs in China, the levels still stood lower than the world

average.

Collating the production and exportable surplus

prospects across major vegetable oils vis a vis projected Asian demand,

the rise in share of Asian demand (India and China) from 53 per cent to

near 61 per cent by 2015 will create shortage elsewhere, implying