Malaysias IOI Corp, the worlds third-largest listed palm oil producer, said the price of crude palm oil could rise 20 percent due to falling domestic stockpiles. "We see prices trading within a range of 2,000 ringgit to 2,300 ringgit, averaging about 2,000 ringgit a tonne. This should be the fair value of palm oil for the time being," said IOI Group Executive Chairman Lee Shin Cheng, without providing a timeframe for the forecast.
Lees view on palm oil are closely followed by traders and industry analysts Malaysias crude palm oil inventories fell 15 percent to a 16-month low in February, a bigger than expected drop, as production of the vegetable oil declined faster than the drop in exports, industry data showed last week. Malaysia is the worlds second largest palm producer in the world after Indonesia.
The benchmark palm oil futures contract on the Malaysian derivatives exchange is currently hovering slightly above 1,900 ringgit a tonne. "This crisis has affected almost all commodities adversely as economic activities slumped. However vegetable oils being a staple food item is more resilient," he added. IOI stock closed on Thursday at 3.76 ringgit.
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