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Malaysia says cooperating with Indonesia in palm oil industry
[KUALA LUMPUR] Malaysia said it agreed with Indonesia to improve cooperation in the palm oil industry given the grim global economic environment that has stoked worries about demand and pushed down prices.
Benchmark Malaysian palm prices slumped to a 6-1/2 year low of 1,863 ringgit (S$620.36) a tonne this week amid a drop in financial markets that was led by a brutal selloff in equities in China, one of the world's top palm oil consumers. Palm prices have shed 15 per cent this year.
Malaysia and Indonesia, which together account for about 85 per cent of global palm oil output, have pledged to improve the perception of the tropical oil, including its nutritional and sustainable production, according to a statement by Malaysia's ministry of international trade and industry (MITI).
Ministers from Indonesia's ministry of maritime and resources and Malaysia's MITI led a delegation from the two countries in a meeting in Kuala Lumpur on Thursday, where the agreement was reached, the statement said.
Indonesia's ministry of maritime and resources, and its trade ministry, could not be immediately reached for a comment. "Any collaboration between the two biggest producers in the world should be positive to the industry," said Alan Lim, an analyst at Malaysian Industrial Development Finance Research.
"If implemented successfully, the discount between crude palm oil and other vegetable oils should be reduced. This is especially true for soybean oil and rapeseed oil, hence leading to better palm oil prices in the long run." Palm is currently trading at a more than US$150 per tonne discount to its main rival soyoil.