Prices of cooking palm oil will fall by as much as 20% from Nov 1, reflecting the decline in world prices resulting from an increase in palm nut supplies. The Commerce Ministry confirmed the reduction yesterday of its retail reference price for the oil to 38 baht a litre from 47.50 baht.
The sharp decline in palm prices has also been affected by the fall in world crude oil prices, which have shed 45% since July on concerns about a slowing global economy.
As a result, the drive to produce alternative fuels, including biofuels derived from palm oil, has lost some of its urgency, and more palm raw materials have become available for food processing again.
However, palm growers will not suffer unduly from the drop in retail prices, according to Vatchari Vimooktayon, the deputy director-general of the ministry’s Internal Trade Department.
She said that the ministry’s subcommittee on vegetable oil agreed yesterday to raise the reference price of palm nuts sold to refiners to 3.50 baht a kilogramme, above current market rates of 3.20 baht, to help farmers affected by price declines.
Prices of palm nuts rose to as much as 4.50 to five baht per kilogramme early this year because of high demand for biodiesel.
However, prices started falling gradually on increased production and the easing oil prices.
Production of palm nuts is estimated at 8.45 million tonnes this year versus 6.08 million tonnes last year.
Mrs Vatchari said the government also urged refineries to price crude palm oil in parallel with the prices they paid farmers for palm nuts, meaning crude palm oil should be around 22-23 baht per kilogramme.
Thursday October 16, 2008
By IZWAN IDRIS and YVONNE TAN
PETALING JAYA: Stocks on Bursa Malaysia tumbled yesterday, dragged down by renewed sell-off on blue-chip firms like KNM Group Bhd and IOI Corp Bhd amid worries that falling commodity prices and weaker global growth outlook will hurt earnings.
The KL Composite Index dropped 16.18 points, or 1.7%, to 949.88 points yesterday, which also reflected declines in other regional markets. In Hong Kong, the benchmark Hang Seng index was down 5% and stocks in Singapore fell 3.2%.
Almost all major markets in Asia were lower with shares in South Korea down 2%, while Australian stocks lost 0.8%. In Indonesia, the Jakarta Composite Index retreated 2.2%.
Shares in Japan reversed early losses to end up 1%, rising on the back of a massive 14% jump on Tuesday.
“Investors are pricing in a much slower earnings growth next year,’’ said a fund manager at a local asset management firm.
“Concerns over global recession weigh heavily on the market and this will limit stocks’ upside potential in the near term,” he added.
Shares in KNM, one of the country’s biggest oil and gas fabricators, plunged 21.5 sen, or 24%, yesterday to 69 sen with 154 million shares transacted.
Yesterday’s market volume was 572 million shares.
Analysts said the huge sell-down on KNM was partly due to worries the company was facing a tougher operating environment owing to falling crude oil prices.
Filings with Bursa Malaysia showed the group’s major shareholders, including foreign funds, had aggressively trimmed down their holdings in KNM in recent weeks.
Crude oil in New York yesterday fell to below US$77 per barrel on concerns demand would falter as the financial crisis crippled global economic growth. The crude oil price had plummeted 47% from its peak of US$147 per barrel three months ago.
KNM told Bursa Malaysia yesterday it had accepted Malayan Banking Bhd’s (Maybank) offer of a three-year term loan worth 150 million euros to settle the bridging loan granted by Maybank for the acquisition of German-based Borsig GmbH.
The takeover was completed on June 6.
Meanwhile, IOI Corp’s share price hit a new two-year low yesterday, down 16 sen, or 4.5%, at RM3.36. It was the second most heavily-traded stock after KNM with 23.39 million shares changing hands.
Shares in IOI Corp, along with big palm oil producers like Sime Darby Bhd and Kuala Lumpur Kepong Bhd, have been under pressure in the past months on declining crude plam oil (CPO) prices.
On Bursa Derivatives, the benchmark third-month contract for CPO fell RM107 to RM1,743 per tonne €“ its lowest since mid-November 2006. Palm oil prices have fallen 43% year-to-date.
Another big loser was Public Bank Bhd, which saw its share price fall 15 sen, or 1.7%, to RM8.90.
Public Bank, currently the biggest bank in terms of market value, said on Tuesday its third-quarter net profit rose 13%, but added that the operating environment would be “more challenging” in the coming months as the local economy was expected to soften in the last quarter and in 2009.
The market will also keep an eye on Tenaga Nasional Bhd today, which is expected to release its results for the financial year ended Aug 31 after the stock market closes.
Sibu: Seven major oil palm plantation companies in the state say they are burdened by taxes as high as up to 55 percent.
The companies-Ta Ann Holdings Bhd, Sarawak Oil Palm Bhd, Solid Timber, WTK Holdings Bhd, Woodman Kuala Baram Estate Sdn Bhd, Sarawak Plantation Bhd and the Rimbunan Hijau Group-are appealing to both the federal and state governments, asking for a reduction of taxes and cess contributions.
The seven accounted for more than 50 percent of the state palm oil annual production.
The palm oil cess imposed by the federal government on palm oil plantations is to subsidise the price of cooking oil.
At a press conference here Monday night, a spokesman for the group, Bolhair Redzuan, a senior executive of Sarawak Plantation, said they had six proposals for the federal government and three for the state governments.
The proposals were aimed at strengthening the position of the industry, he said.
“We want the federal government to consider waiving the windfall profit levy, the outstanding amount on Malaysian Palm Oil Board (MPOB) cess and the workers’ levy,” Bolhair said.
“At the same time we want it to review the discount on CPO (crude palm oil) price for Sabah and Sarawak, the MPOB oil cess and fertiliser subsidy,” he said.
Bolhair said the group was asking the state government to legalise the illegal foreign workers now employed in its oil palm plantations, saying the state was suffering from a shoratge of workers.
He said other proposals were for the government to consider reducing the special sales tax on CPO and palm kernel and deferring the local council assessment rates on the plantations for the first 10 years.
“Besides the hefty taxes, the industry faces challenges such as low CPO prices, escalating costs of fertilisers, chemicals and fuel as well as labour shortage where the reliance is 95 percent on foreign workers,” he said.
According to him, the group felt it was unfair for them to pay the windfall profit levy as Sarawak “is a late entrant in the industry and has the lowest area (at 20 percent) that can contribute to profit”.
Although Sarawak has, to date, developed 664,612 hectares, only 103,678 hecatres or 20 percent are income-generating or matured areas.
“Thus, we are still not yet financially self-sufficient in our operations. We still require huge cashflow or injection of funds,” he added.
Bolhair said the windfall profit tax affected not only the big players but small companies and smallholders who were still struggling to make ends meet.
“This is putting a lot of pressure on them. We are not questioning this policy of the government but wondering why the oil palm business is selected for this tax,” he said.
On the cess fee paid to MPOB to allow it to carry more research, Bolhair said the group hoped for a generous discount for the state in view of the age of the industry, the long gestation and investment recouping periods as well as the difficult soil and terrain conditions.
“We rather the fee be considered based on case-by-case basis. Perhaps the government can consider implementing differentials in terms of cess contribution where the bigger companies will have to pay more,” he said.
On fertiliser, Bolhair said it had drastically increased in prices by 150 to 370 percent and was still rising.
The capital investment in the form of plantation development expenditure in the industry has reached an estimated RM11.36 billion in the last six years of oil palm plantation growth in the state, he said.
The plantation sector has generated 14,000 direct job opportunities for Sarawakians, including management and operation staff. – Bernama
Wednesday, 15 October 2008
A Co Clare farmer has gone on hunger strike in prison as part of a dispute over the compulsory purchase of his land.
Sixty-seven-year-old Oliver Clune, from Barefield, was jailed on Monday for contempt of a court order to stop him interfering with Clare County Council’s plans to build a new link road in Ennis.
The dispute has been ongoing for 14 years and centres on a number of issues, including the level of compensation, which is believed to be in the region of €1.8m.
Mr Clune says his hunger strike will continue until the row is resolved.