Since I started writing on this series, the CPO (crude palm oil) price for palm oil has risen by more than 10% and had infact breach the RM3,300 mark. For those who do not understand CPO, maybe FFB (fresh fruit bunch) will be a better indicator. Flip to your local papers and in the business section, they will list prices for FFB for different regions in Malaysia.
FFB is traditionally dictated by palm oil mills who then decides on the FFB price by looking at their CPO futures contract price. Meaning it really depends on the market who bought forward futures for this commodity.
Interestingly, if you walk the market and the bankers know you are a palm oil man, they will be hovering within your radar every few minutes and within hand reach. Contrast this to 3 or 4 years ago when palm oil price was relatively stable but then without direction.
So the question which is on everyone’s lips, will this price remain?
Most analyst would predict a strong showing for the rest of 2008 but will not have significant upward trend. However, the price may not be sustained for medium term as more and more players come into the industry. Many came into the industry without really knowing much of the industry. This can be detrimental as palm oil industry is pretty much a cowboy industry where you will be con every step of the way unless you have hands on experience.
For a good 100 acre acreage you should be able to sustain an income level of RM500,000 per annum after deducting costs. And it goes up depending on your acreage and yields.
So are you one of them jumping into this industry?
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