Palm oil prices soar as Malaysian stocks fall short of demand

Oilseed analysts are predicting a squeeze on supply of Malaysian palm oil for months to come, as prices are pushed up by farmers’ inability to invest in inputs and poor extraction rates – while demand for fried and oily food is not abating.

Malaysia is the world’s largest exporter of for food and cosmetic uses, totalling 15.4 million tonnes in 2008 according to the Malaysian Palm Oil Council. This means that tight supply and unfavourable growing conditions can have a major impact on prices and availability for industrial users.

And while prices climbed down from dizzying height in the second half of 2008, palm oil futures hit a new seven-month high on Friday, when contracted oil for June closed at 2,299 ringgit ($636.3) per tonne on the Bursa Malaysia Derivatives Exchange.

The Times reported that demand for edible oils from newly industrialised countries is not abating in the downturn, as Western-style fried food has become ingrained in affluent Asian diets and is no longer seen as an expendable luxury.