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G. Chandrashekhar

As growing demand is estimated to outpace supply

Jakarta May 3 Global vegetable oil demand in 2007-08 would grow by a total of 6 million tonnes (mt), comprising 4 mt for food and 2 mt for fuel; however, global supplies are likely to rise by 3.3 mt only.

This will lead to a stock drawdown or demand rationing, as a result of which vegetable oil prices are set to rise, according to Mr Dorab Mistry, London-based Director of Godrej International Ltd. He was addressing the delegates at the Globoil International conference here on Thursday.

Bull market

"We are in the midst of a rousing bull market', he asserted adding that fundamentals point to a bullish trend.

According to Mr Mistry, Black Sea sunflower oil will rise from the present $700 a tonne to $750 a tonne f.o.b., while soyabean oil will go from $660-670 to $700-730 f.o.b.

Crude palm oil futures (benchmark third month) on Bursa Malaysia will soon reach Ringgit Malaysia (RM) 2,400 a tonne, with the possibility of prices crossing RM 2,500/t. RBD palmolein too will move higher than $700/t for forward positions, the speaker forecast, adding that there would be an inverse of $20-30 a tonne.

Coconut oil

Coconut oil fundamentals have been bullish and prices may reach $850/t c.i.f. Rotterdam, while crude palm kernel oil will reach $820/t, he forecast. While South America had the capacity to expand production in response to high prices, much of the output increase would be soyabean, a low oil content oilseed, he pointed out.

Mr Mistry believed India would import 6.4 mt of vegetable oil in 2006-07, up from 5.4 mt the previous year. The composition of imports would broadly be 4.7 mt of various palm oils and 1.2 mt of soyabean oil, with the rest shared by sun oil and others.

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