The Hindu Business Line : Clarity in vegoil market by mid-Aug: Mistry

Chennai, July 3 The situation in the global vegetable oil market is likely to be clear by mid-August only and a bull run is not yet in sight, according to Mr Dorab E. Mistry, Director of Godrej International Ltd.

Crude palm oil futures for the third month are likely to trade in the range of Malaysian ringgit (MYR) 2,300-2,500 in the next six weeks as the stock to usage ratio of less than one month production is very tight, he said at the 2007 China Oil Market Outlook in Beijing.

A copy of the speech has been made available by the Solvent Extractors Association here.

Any further fall in prices would result in demand pick-up, leading to difficulty in later months.

“If prices rise too far above MYR 2,500, demand will shrink too much and lead to dramatic stock build in September,” Mr Mistry said.

DELICATE BALANCE

The vegetable oil market is delicately balanced over the next few weeks and palm oil stocks are low, while prices have not yet completed the job of demand rationing, he said in his presentation.

Hinting that biodiesel from jatropha was a distant possibility, the London-based Godrej International official said that palm biodiesel was a safety net that will become useful if crude palm oil prices decline to MYR 1,900. Dwelling on the bull run that began in 2001, Mr Mistry said that the market will carry on its current journey as long as cereals, coarse grains and oilseeds “continue to fight for acreage and China and India continue to grow rapidly.”

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