News

August 26, 2008

That Was The Week That Was... In Grains And Alternative Power Commodities

By Sally White

The exodus of funds from the soft commodity sector, as the dollar strengthened and the oil price dropped by 5.4 per cent, caused considerable commodity price falls. And looking into the outlook on a more fundamental basis, the world’s leading vegetable oil analyst was last week fairly gloomy as to the prospects for any immediate recovery. According to Dorab Mistry of Godrej International, demand continued to be weak even into the third quarter of 2008 and he warned that there’s as yet no sign of any quick reversal in this trend. Vegetable oil prices, already down sharply, are now dependent on world energy prices.

“There is evidence of demand destruction in the second quarter of this year due to high prices in the first quarter”, Mr Mistry said at a Malaysian Palm Oil Council meeting. He said the global economic slowdown had come at a time when vegetable oil production in almost every part of the world had been better than expected. Weather conditions had been ideal, particularly for soyabeans in North America.

Crude palm oil prices are now down almost 40 per cent from...