CIMB increase projected palm oil prices; contradicts a price drop predicted by TransGraph

CIMB Research increased its forecast for palm oil prices to $760 per tonne in 2007 and $810 in 2008. This represents a 60% price increase in 2007 and 8.5% in 2008. They pointed to increased biofuels and food-related demand, and bad weather, were responsible for the increases.

The company indicated that B2 mandates going into effect in Brazil and Italy in January 2008 would continue to increase demand for crude palm oil.

Last week, a report by TransGraph projected that palm oil futures in Malaysia would fall as much as 4.7 percent by the end of October due to increased production in India. Price points were $723 per metric ton.

Indonesia and Malaysia produce 85% of the world’s palm oil, and are expected to increase production to 35.2 million metric tons in 2008, versus 32.4 million tons in 2007.

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