Palm Oil Developments No.34 (June 2001) p11-13

Price Scenario in 2000 and Prospects in 2001

RAMLI Abdullah

The prices of selected oils and fats were generally low at the beginning of the year 2000 and continued to decline (for the second consecutive year) to register the lowest prices since 1998, the last peaked year recorded by these oils and fats (Table 1). One of the main reasons for the low prices in 2000 was the oversupply of oils and fats in the world market, due mainly to the supply situation of palm oil and soyabean oil. The world palm oil production increased from 20.5 million tonnes in 1999 to 21.6 million tonnes in year 2000. The Indonesian share of production had increased from 30% in 1999 to 32% in year 2000 while the Malaysian share dropped slightly from 51% to about 50% during this period (Table 2). Thus, Indonesian palm oil again provided serious competition to Malaysian palm oil in the world market during the year 2000. On the other hand, soyabean oil production increased from 24.7 million tonnes in 1999 to 25.4 million tonnes in 2000. Overall, the total production of oils and fats in 2000 increased by 5.0 million tonnes (i.e. by 4.6%) from the previous year. This overall increase in production was actually higher than the average increase in production in the past which had been in the range of 2 to 3 million tonnes. This situation could have been a bearish factor for oils and fats prices in 2000. Prices of palm products fell significantly by as high as -36% in the case of palm kernel oil and -23.5% in the case of RBD palm stearin (Table 1). The price of soyabean oil dropped by -21% from US$ 427 t-1 in 1999 to

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