Affecting economies in strange and unpredictable ways, where prices rises should have been price decreases, but is not ...
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markets.scmp.com
Monday, September 24, 2001
Conflict may lift prices of palm oil
REUTERS in Kuala Lumpur
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An expected fall in output and possible hoarding in case of retaliation for deadly aerial attacks against the United States may soon push the prices of crude palm oil back above M$1,000 (HK$2,052) per tonne, according to Malaysian plantation giant Kumpulan Guthrie.
Crude palm oil prices, which reached about $1,300 per tonne early last month, have been particularly volatile since the terrorist attacks on New York and Washington on September 11.
Benchmark third-month futures fell to as low as $890 last week from more than $1,000 on the day of the attacks. However, by Friday they had climbed back to $993.
Guthrie chief executive Abdul Khalid Ibrahim expected the recovery to continue, pushing prices back through $1,000.
"The reason why I'm more bullish is partly because I think people will stock up in times of uncertainty," Mr Khalid said.
Traders are worried about a possible disruption in shipments from Malaysia and Indonesia to Pakistan, a key market for the two top producers, in the event of retaliatory attacks by the US. Pakistan borders Afghanistan, accused by the US of harbouring terrorist leader Osama bin Laden.
One plantation analyst noted that during the 1991 Gulf War crude palm oil prices appreciated by about 30 per cent despite the cloud hanging over the big Middle East market, which accounted for 15 per cent of palm oil consumption.
Mr Khalid said an expected decline in Malaysia's crude palm oil output and stocks could also prop up prices.
He said Malaysian palm oil stocks had fallen to as low as 880,000 tonnes at the end of last month, less than a month's requirement and down by a steep 320,000 tonnes from August last year.
There would be a seasonal increase in production and stocks this month but they would still be sharply below levels of September last year.
For the September to December period Mr Khalid expected Malaysian crude palm oil production to be 600,000 tonnes lower than a year earlier.
He saw palm oil stocks ending the year at 900,000 tonnes, a three-year low
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