The Thai government plans to buy 150,000 tonnes of crude palm oil from crushers in a bid to shore up the price of palm fruit bought from farmers, its commerce minister said on Friday. "The plan is due to be kicked off very soon," Chaiya Sasomsab told Reuters.
The government said it would buy crude palm oil at 22.50 baht ($0.643) per kg from crushers, or around 30 percent higher than market prices, which were around 16.50 baht, he said. The crushers must agree to buy palm fruit from farmers at 3.50 baht per kg, higher than the current price of 2.60 baht. "That would help lift palm fruit prices higher," he said,
Crude palm oil prices have fallen more than 50 percent this year, in line with weaker palm oil futures, which set the regional trend. The benchmark January contract on the Bursa Malaysia Derivatives Exchange stood at 1,622 ringgit ($457) per tonne at the end of the morning session on Friday, well below record highs above 4,000 ringgit marked in February.
Crude palm oil prices have slid due to a big drop in crude oil prices, which has raised concern about the likely demand for alternative biofuel, traders said. Traders said they did not expect the intervention programme to last long as supply was expected to fall gradually over coming months when the dry season sets in.
Thailand is expected to produce around 1.4 million tonnes of crude palm oil in 2008, slightly higher than 1.1 million tonnes in 2007, according to Commerce Ministry data.
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