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Palm oil prices likely to remain bullish [26-07-2012]  
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PALM oil prices will likely remain bullish for the rest of the year as demand for the commodity continues to rise due to external factors.

Crude palm oil (CPO) prices can trend higher as drought in major soyabean growing areas in the US and potential El Nino play havoc on crop production.

Additionally, India lifted a six-year freeze on the base import price of refined palm olein, but kept its CPO imports duty free.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said CPO prices should stay on the upside of RM3,000 per tonne for the next five months.

"I think our palm oil prices will not show any surprises or disasters within this year," he said after visiting Trushidup palm oil mill here recently.

"Prices are higher now, and if the US drought continues as expected, there will be more demand for palm oil and prices will go up," he added.

Analysts recently raised CPO price forecasts from anywhere above RM3,100 per tonne for 2012.

Dompok later visited the Sg Ruku palm oil mill and was briefed on the status of palm oil mill effluents (POME) management in the Ki-nabatangan river basin.

He noted that out of 428 mills in the country, 124 are in Sabah.

"Thirty five of the mills are in the Kinabatangan basin, out of which 14 are in the Kinabatangan district itself. They generate a huge amount of POME and this must be properly managed to protect our rivers," he said.

He said the government and the Malaysian Palm Oil Board (MPOB) are actively evaluating the capacity of existing mills to achieve 20 parts per million (ppm) Biological Oxygen Demand (BOD) consistently.

For Malaysia, generally, the limit of BOD for discharge into the watercourse is 100 ppm.

However, in Sabah, Sarawak and environmentally-sensitive areas, more stringent conditions have been imposed by the Department of Environment (DOE).

"For example, for new oil palm mills, a 20 ppm BOD requirement, coupled with land irrigation, has been imposed in Sabah. In very sensitive areas, the DOE has even imposed a zero discharge requirement," he said.

Sabah is the the largest CPO producer in Malaysia, contributing 5.2 million tonnes, or 25 per cent, of the nation's total production of 18.9 million tonnes last year.

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