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.