Crude palm oil (CPO) is expected to trade between RM2,500 and RM3,200 a tonne in 2013, on the back of continuous demand for the commodity.
Malaysian Palm Oil Council (MPOC) Chief Executive officer Tan Sri Dr Yusof Basiron said palm oil continued to be an attractive long term commodity for producers and consumers.
He said China, the European Union and India will continue to be "chronic" net importers of oils and fats through 10 million tonnes annually, with Malaysia and Indonesia, the two biggest palm oil producers, being net exporters.
However, Yusof said at present, the palm oil price was affected by a temporary oversupply, and supply rationalisation is needed to stabilise the market.
He said the temporary supply imbalance is wrongly speculated as having reduced demand which might affect price stability.
"Demand is easy to forecast. But we have had to manage the extraordinary palm oil supply that occurred over three or four months of last year, and which led to a price drop, low prices and even reduced our projected price from RM3,000 to RM2,700 a tonne for 2012," he said in his address, "Market Challenges and Opportunities for Palm Oil in 2013 and Beyond".
He was speaking at the two-day Palm & Lauric Oils Conference & Exhibition which began here today.
Yusof said the needed supply rationalisation includes building more tanks to cater for peak months, and more ships for shipment during peak production periods.
"The supply rationalisation issue must be addressed both in Malaysia and Indonesia, as the biodiesel programmes in both countries can stabilise palm oil prices," he added.
Meanwhile, Yusof pointed out several challenges in the global palm oil industry, namely the ideology threat, growth in world population versus food security, scarcity of land and global warming.
He said the global population is projected to grow to nine billion by 2043 from seven billion in 2011, and food production must meet this rate of increase.
"This alone is sufficient to exert pressure on commodity prices," he added.-- Bernama