Palm oil may exceed 2,500 ringgit

The price of palm oil may surge to more than 2,500 ringgit ($731) a tonne on increased demand from India and China, said Dorab Mistry, director at Godrej International.

The global consumption of food "may expand by 4 million tonnes,'' while the energy sales would increase by 2 million tonnes in the year to March 2008, Mistry, who has traded vegetable oils since 1976, said at a conference in Jakarta. Godrej is one of the largest vegetable oil buyers. The sales of palm oil have been surging in China and India, the world's two most populous countries, driving the prices to the highest since 1998. The oil, 85 per cent of which is grown in Malaysia and Indonesia, is used in foods and as a fuel additive.

"India has stepped up purchases,'' said Govindlal G. Patel of Dipak Enterprises, an edible-oil trader in Rajkot, western Gujarat. "There is a shortage in palm oil caused by increased imports by China, the U.S. and some European countries.'' Palm oil futures on the Malaysia Derivatives Exchange have averaged 2,002 ringgit a tonne so far this year, 38 per cent more than a year earlier. The most active contract was at 2,254 ringgit at 4:19 pm. The nation's imports "will accelerate, far exceeding the previous year,'' said Mistry, who forecast a rise to 2,400 ringgit a tonne on March 14. India may import 6.4 million tonnes of vegetable oils in the year to October compared with 5.4 million a year earlier, he said. Palm oil would account for 4.7 million tonnes, up from 3.3 million, he added.