Monday, February 25, 2008

Increasing Asian Demands for Palm Oil May Affect Soy

by Michelle Roberts

Palm oil is the cheapest cooking oil in the world and that is why it is mostly used in cooking all over the world but this picture may not last long as many of the biggest nations of Asia are asking for palm oil. Palm oil is the most essential element in food items like curry, stir fries and others; the palm oil from Malaysia is 15% less costly than soybean oil as recorded on the Chicago Board of Trade. Commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney, Tobin Gorey, in this connection says that these two commodities will soon record equal prices which will increase profits by $1.5 million from an investment of $10 million.

The US Department of Agriculture said that income of Asians is rising which in turn will boost the demand for palm oil by millions of Asians for frying and processed food items. The rising price of crude oil which stands at about $100 in the international market has also affected the demand for unconventional fuel that includes vegetable oil. The Chinese government reported that rising consumption in the country will affect the supply which will drop owing to the recent snowstorms which ravaged the rapeseed yield in January this year.

Manager at Schroders Plc’s $6 billion agricultural commodities fund in London, Rudolph Roche, said that China may have to face huge shortage of vegetable oil, the obvious implication of which means that the country will have to import more from the world. Given this scene in China the most immediate beneficiaries would be Indonesia and Malaysia where palm oil is produced and the short distance to China from these countries also means reduced shipping costs for these exporters of palm oil, the manager further added. The price rise in palm oil will affect Japan’s biggest instant-noodle maker, Nissin Food Products Co. For Nissin Food Products Co. will increase while for Sime Darby Bhd. based in Kuala Lumpur profits will increase because this organization is the biggest in the world in terms of palm plantations ownership and it is also the biggest publicly traded palm plantation company. According to the data by the US Department of Agriculture 36% cooking oil in the world is taken from palm plants than any other plant in the world. Thus given the huge share of palm oil the gains are slated to be higher.

The CEO of fertilizer maker Potash Corp. of Saskatchewan Inc. William Doyle had said in an interview that 93% of the palm oil in the world is used in cooking and there is huge potential for it and the trend would continue. Palm oil and Soybean oil increased to their record high on Monday and had stood at 3,914 ringgit a ton and 64.47 cents a pound. Chief financial officer for Biox Group BV in Rotterdam, Edgare Kerwijk, said that he did not see any reason why the prices of Soybean and Palm oil can remain as they are. His company has stalled its bio-diesel projects owing to the rising prices.

 

 

 

Stories related to: Increasing Asian Demands for Palm Oil May Affect Soy

 

 

Visited 1302 times, 1 so far today