Palm oil prices hit six-week high

Palm oil hit a six-week high of RM2,706 per tonne yesterday on concerns of erratic weather curbing soyaoil supply and lack of skilled Indonesian workers to harvest palm fruits in Malaysia.

This is the third time this year palm oil futures pierced through the RM2,700 per tonne level.

Johor-based Kim Loong Bhd managing director Gooi Seong Heen said: "The run-up in prices is most probably fuelled by fear of erratic weather causing supply shortage in soyaoil.

"This month, we hope to harvest more fresh fruit bunches but then again it depends if we can secure enough harvesters. We appeal to the government to rectify the situation."

Sabah-based Kwantas Corp Bhd group managing director Steve Kwan Ngen Chung concurred with Gooi. "It is very important for Malaysia to maintain good diplomatic relations with Indonesia. Malaysia's palm oil industry's earnings could be hurt if our government is not careful in handling the foreign worker issue. We're entering the peak fruiting season but there's lack of skilled harvesters. Many have gone home to Indonesia for Hari Raya. So far, not all have returned to report for work," Kwan said.

Co-incidentally, palm oil futures on Malaysia's Derivatives Exchange along with other derivatives migrated to CME Group's Globex trading system yesterday.

Palm oil futures in Kuala Lumpur move in tandem with other vegetable oils traded in Chicago and Dalian because palm oil and soyaoil are near-perfect substitutes. They are used to make cooking oil, margarine and biodiesel.

In China, the most heavily-traded refined, bleached deodorised palm olein May 2011 contract on the Dalian Commodity Exchange rose 4 per cent to 7,630 yuan (RM3,520) per tonne.

Over in Chicago, CME Group's December delivery soyaoil futures traded on Chicago Board of Trade's Globex added 1.91 per cent to a high of 42.71 cents a pound. Delay in harvesting of the soyabean due to unfavourable weather condition is supporting the prices. As for palm oil, Chicago's December delivery contract, which is pegged to the Malaysian benchmark, added as much as 3 per cent to US$870.25 (RM2,698) a tonne, the highest since the exchange started trading the contract in May.

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