Palm-oil exports from Malaysia, the second-largest producer, may climb as much as 10 percent this year, expanding faster than local output and helping to drive down stockpiles and support prices, an industry group forecast.
Exports may climb to a record 19.8 million metric tons from last year’s 18 million tons as demand in India and China gains, Lee Yeow Chor, chairman of the Malaysian Palm Oil Council, said in an interview. The price may advance 3.9 percent to 3,300 ringgit ($1,089) per ton in 2012, according to Lee.
Declining stockpiles in Malaysia, which have held above 2 million tons since September, may help futures extend a 15 percent rally since October, boosting profits at growers IOI Corp. (IOI) and Sime Darby Bhd. (SIME) Credit Suisse Group AG raised its forecast for 2012 prices 28 percent to 3,200 ringgit on Feb. 1, saying supplies will be capped, while demand remains strong.
“The market hasn’t completely accounted for the amount of vegetable-oil demand that’s going to be shifting to palm oil this year,” said Erin FitzPatrick, an analyst at Rabobank International in London. Prices were holding above 3,000 ringgit on prospects for lower global soybean oil and rapeseed oil output, FitzPatrick said by phone yesterday.
The April-delivery contract fell as much as 1 percent to 3,166 ringgit on the Malaysia Derivatives Exchange today before trading at 3,177 ringgit at 11:55 a.m. in Kuala Lumpur. While the price is little changed this year, it’s rallied from a 12-month low of 2,754 ringgit on Oct. 6.
Dorab Mistry, director of Godrej International Ltd., has forecast a bull market in palm oil this year as demand growth outstrips the projected increase in production. The price may reach 4,000 ringgit by June, Mistry forecast in December.
Global soybean-oil exports may decline to 8.56 million tons this year from 9.5 million in 2011, according to a forecast from the U.S. Department of Agriculture. Months of dryness caused by the La Nina weather pattern have parched crops in South America.
Palm-oil stockpiles may drop to “healthy levels” from April as shipments from Malaysia rise on growing production after the seasonally low-output months of January and February, Lee said. Global vegetable-oil demand may grow by 3 percent to 5 percent in 2012, said Lee, who’s also executive director at IOI, Malaysia’s second-largest listed producer.