Palm oil price is expected to increase by year-end due to low production of substitutes such as vegetable and soybean oils, the Malaysian Palm Oil Council (MPOC) said today.

The US Department of Agriculture has been reported to have cut soybean production by about five per cent and this could lead to low supply globally.

"This is an advantage to Malaysian palm oil.

"With low soybean oil supply, it can help boost palm oil prices as more global market players will seek for the commodity (palm oil), of which Malaysia is the second biggest producer after Indonesia," council chairman Datuk Lee Yeow Chor told Bernama on the sidelines of the Palm Industry Leadership Forum 2013.

For the past eight months, the council has been monitoring the palm oil inventory, which saw the commodity's stock level steadily dwindling to 1.6 million tonnes as at July, Lee said.

He expects the inventory to further fall by year-end.

Meanwhile, Cargo Surveyor, Intertek Testing Services, has estimated higher palm oil exports to 880,979 tonnes for the August 1 to 20 period versus 798,482 tonnes in the same period in July.

The improved export figures were mainly attributed to China, the world's largest consumer of edible oil that began restocking of palm oil ahead of its September Mid-Autumn Festival.

Earlier, in his speech, Lee said through the forum, the council was confident that the palm ol industry would be able to overcome the challenges faced by the industry.

"Currently, palm oil price is at its lowest level in over two years, while the Asian economy is still struggling to come to terms with the impact of the US Federal Reserve winding down its bond purchases or quantitative easing programme.

"Currencies in Indonesia, Malaysia and Thailand have weakened in recent years while the Indian rupee has plunged to another historic trough.

"All these factors will invariably have an impact on the palm oil price," he added.

At present, palm oil is being traded within the RM2,300-RM2,400 range versus RM3,000 a tonne in the same period last year.-- Bernama