Palm oil prices are not expected to rise significantly in the event of war

Lead: Kuala Lumpur (Reuters) - a senior Malaysian industry official said on Wednesday that palm oil prices are not expected to rise significantly if the war breaks out, as the current price of palm oil has exceeded the level supported by fundamentals Malaysia is the largest palm oil producer in the world Chandran, chairman of BGC Malaysia palm oil association, said that in fact, palm oil will encounter resistance at the current level of rm1600 per ton, because soybean oil may put pressure on palm oil prices due to high soybean production Chandran said palm oil prices will stay at current levels until soybean production in Argentina and Brazil becomes clearer by the end of April Palm oil prices will fall to between rm1300-1400 per ton after April BGC if war breaks out in Iraq, it may mean that the palm oil cargo ship originally intended to pass through the Suez canal must be diverted, which will increase the transportation cost of palm oil, and the price of palm oil may rise due to the risk of Gulf War BGC chandran said all palm oil exports to Europe would be affected, meaning Malaysia would have to find another route and pay higher transportation costs This will also lead to Malaysia's inability to supply market demand in a timely manner, which will lead to an increase in Malaysia's inventory, which will have a devastating impact on prices BGC chandran said that if there were between 1.3-1.4 million tons of palm oil at the end of any month in these months, palm oil prices would be under pressure This is likely to happen given the declining demand from major purchasers such as India and Pakistan and the surplus soybean stocks this year BGC US Department of Agriculture recently predicted that Brazil's soybean production will reach 51 million tons in 2002 / 03, compared with 42.6 million tons last year Argentina's soybean production is around 33.5 million tons, higher than the 30.2 million tons expected last month By October this year, the U.S soybean production may reach 75 million tons, basically the same as last year's production A large amount of soybean oil produced in the Americas will also be exported to India, which is also the main market for Malaysia's palm oil export BGC the price of edible oil in India has increased significantly due to the decrease of oil seed production and vegetable oil production caused by the continuous drought in India The market expects the Indian government to cut import duties on edible oil in its February 28 budget plan to calm domestic oil prices India's basic tariff on crude palm oil is 65%, compared with 45% for soybean oil Malaysia is fighting for India to balance import tariffs on two vegetable oils But chandran said the practice would be meaningless in the real market, which would be surprising if Brazil and Argentina, suffering from economic crisis, sold soybean oil at a price lower than the international market (US $1 = RM3.8) BGC BGC