Malaysia to try to stabilise falling palm oil prices: report

Source: http://www.raymondteo.com/2008/07/28/malaysia-to-try-to-stabilise-falling-palm-oil-prices-report/
Posted on Sunday, July 27th, 2008 | In Market Commentary

Contributed by: Raymond Teo (http://www.raymondteo.com) -

Malaysia to try to stabilise falling palm oil prices: report

Malaysia will put in place a series of measures to stabilise plummeting global palm oil prices including selling off crude stocks, a report said Sunday.

Peter Chin, minister of plantation industries and commodities, told the Sunday Star newspaper the government wanted to make sure that the almost 25-percent drop in prices in recent months did not become a long-term trend.

“The ministry expects palm oil to contribute up to 60 billion ringgit (19 billion dollars) in revenue to the country’s coffers this year, but the substantial drop in the global price may upset this target,” he said.

“We are worried this may be the start of a further decline in the price of palm oil and we will take counter-measures to maintain a good price,” the newspaper quoted him as saying.

In the past week, palm oil prices fell to 3,095 ringgit per tonne from 3,500 ringgit. The price early this year was at 4,000 per tonne.

Chin said Malaysia will export crude — not refined — palm oil to China, India, Pakistan and the Middle East.

It will also increase exports to Western countries where palm oil can be used as bio-fuel during the upcoming northern hemisphere winter, he said.

Chin said other measures include increasing the usage of crude palm oil for bio-fuel production in Malaysia.

Oil palm cultivation occupies 67 percent of Malaysia’s total agricultural land, and some 500,000 people are engaged in the sector. Malaysia hopes palm oil production will hit 20 million tonnes by 2020.