Suggesting that the market has bottomed out, Malaysia’s Minister for Plantation Industries and Commodities said in an interview that crude palm oil prices may stay firm around MYR1,800-MYR2,000 a mt for the next few months, after rising almost 43%, Dow Jones reports. Prices will be steady due to a slowdown in production, decline in inventories and an increase in its use for making bio-diesel, the minister said, adding that output is now expected to be lesser than what was initially projected. He didn't rule out a possibility of CPO prices rising above MYR2,000/mt if crude oil recovers and there is speculative buying. Still, many investors may not take such a risk at a time of volatility and the recession, he said. He added that rising demand for palm oil in countries such as India and Pakistan is likely to support prices.
An ongoing oil palm replantation program, heavy rains and floods, may ensure Malaysia's palm oil production in 2009 is little changed or even slightly lower than last year's 17.8 million tons, he said. Further, he expected between 150,000 tons and 200,000 tons of CPO to be turned into bio-diesel for 5% blending with diesel in 2009, though reaching the target of consuming 500,000 tons would not happen anytime soon because logistics, including a distribution network, needs to be established.
Separately, according to the Minister, Malaysia is likely to consume 150,000-200,000 metric tons of palm-based bio-diesel in 2009, but bio-diesel is unlikely to be used in commercial and private vehicles for a year. Finnish refiner Neste Oil said its S$1.2 billion ($776 million) renewable diesel plant in Singapore is on track to be completed by June 2010 and production will start in Q3, Reuters reports. The 800,000 mt per year NExBTL plant will use feedstock such as animal fat, palm oil and other types of vegetable oils. The firm plans to hire up to 60 people by the end of this year for the Singapore plant, rising to a total of 100 people by mid-2010. (6 March 2009)