CPO prices eyes RM7,000?

KUALA LUMPUR Feb 25 - Are crude palm oil (CPO) prices which hit an all time high of RM6,000 a tonne last week, headed towards RM7,000?

As at yesterday, Malaysian Palm Oil Board data showed that some CPO futures for the third month deliveries have already reached RM6,500.

The spike is mainly attributed to high commodity prices such as wheat and corn spooked by Russia's invasion of the Ukraine yesterday.

It's still early to decipher, but if skirmishes worsen, there is a high possibility that CPO prices could scratch the RM7,000 level in the next few weeks or earlier.

Meanwhile, Bloomberg reported palm oil which is used in thousands of products from cookies to shampoo, is on a record-breaking run as a labour shortage crimps output in major producer Malaysia.

That could feed through to higher prices at grocery stores as everything from pasta to chocolate becomes more expensive to produce, further squeezing household budgets. 

"All food items such as wheat, corn, palm oil and fertiliser are spiking right now due to fears of a supply shortage," said Bloomberg.

Now is the time to replant

At a time when CPO prices are high, it would be next to impossible to 'instruct' some palm oil companies to replant.

Why should they? Times are good now and why should they shoot the goose which are laying the golden eggs?

Individual smallholders for example would be extremely reluctant to replant when the oil palm fruits can fetch such a high price at the mill.

But it is imperative for the industry particularly the individual smallholders to replant.

Take FGV Holdings Bhd. for example and its parent Felda which are notorious with aging estates. Some of its trees are more than 20 years old and are in dire need to be replanted.

Can't blame them for having difficulties to replant because Felda has to manage over 100,000 smallholder families.

An oil palm tree is only productive between 7 to 15 years old. Any older than that, the crop should be replanted to reap higher harvests and profit in the future.

Admittedly, it is hard telling a smallholder to replant his cash cow. But it will be worse down the road when its 20 year old tree can only sell so much at RM600 a tonne.

Record-breaking CPO price, timely to invest in technology

Now that the palm oil sector has set a new record hitting an all-time high of RM6,158 a tonne on Feb 21, it is timely to invest in new technology.

Oil palm growers should take the opportunity to invest their gains in technologies which can assist workers especially in harvesting and collecting the fresh fruit bunches in the plantations.

MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir reportedly said plantation companies must be creative in using technology to bolster their operations in the plantations such as harvesting, collecting and transporting the fresh fruit bunches to the mills efficiently in order to reduce dependency on labours.

MPOB has to date developed 47 types of machineries for use in the plantations which include technologies for harvesting, collecting loose fruit and in-field transportation which can improve worker productivity and plantation operation efficiency.

MPOB is right folks. Take full advantage of the good times to prepare for rainy days. - DagangNews.com