Sri Lanka Carson unit says palm oil market stabilised

May 18, 2009 (LBO) – Palm oil prices have stabilised after last year’s collapse and demand should grow in future, according to Good Hope, a subsidiary of Sri Lanka’s Carson Cumber batch group with plantations in Malaysia and Indonesia.

“Further, sustained economic growth in largely populated countries like China and India and increased effect of urbanization depicting a shift to more health conscious diets will also provide underlying demand growth for palm oil.”

He said the group’s replanted extents in the region have come to maturity and the yields were good.

The sharp fall in palm oil prices and rising input costs especially fertiliser squeezed margins of Good Hope, a Carson subsidiary with plantations in Malaysia, its chairman Hari Selvanathan told shareholders in the firm’s annual report for the financial year ended March 31, 2009.

But prices are believed to have stabilised with demand for palm oil firm and its price lower than competing vegetable oils while demand is expected to grow from India and China which have big populations, he said.

Good Hope and other Carson Malaysian palm oil units have now been grouped under a new Singapore-based subsidiary Good Hope Asia Holdings.

The company said its profits and sales fell during the year after the global commodities collapse and rising costs, a performance mirrored by other Carson palm oil units in south-east Asia.

Good Hope’s Malaysian property consists of 312 hectares of oil palm plantations.

It also has bigger plantations in Indonesian under the subsidiary PT Agro Indomas, the company’s investment in Indonesia made through the Shalimar Developments Sdn Bhd investment vehicle in Malaysia.

PT Agro Indomas has a land area of 21,273 hectares of which presently the gross planted area amounts to 19,396 hectares, the company said.

PT Agro Bukit, the group’s newest oil palm plantation in Indonesia, has an extent of 10,818 hectares planted as at March 31, 2009.

Selvanathan said size would be critical to maintaining the profitability of palm oil plantations.

” . . . it is expected that CPO (crude palm oil) prices would remain at the current levels over the medium term to long term given its demand side fundamentals coupled together with low price advantage it carries over other competing vegetable oils,” he told shareholders.