CPO prices expected to stay around RM2,450-RM2,550
KUALA LUMPUR: Crude palm oil (CPO) prices will likely to hover between RM2,450 and RM2,550 per tonne this year.
This is attributed to high inventory levels, unfavourable foreign exchange rate and adoption of revised accounting policies.
Public Investment Bank believed that the lower month-onmonth inventories were mainly due to lower production on shorter working days and were partly offset by a decline in exports.
Malaysian palm oil inventory last month dropped 2.9 per cent month-onmonth to 2.47 million tonnes, the lowest in four months.
The research firm said the spread between palm oil and soyabean oil prices had narrowed recently, making palm oil less pricecompetitive and that could hurt demand.
Kenanga Research said plantation companies should see reasonable margins despite the bearish price prospect and rising production environment.
“Our CPO price projection remains well above the per tonne production cost of an efficient planter about RM1,400 per tonne.”
Hence, analysts have maintained a “neutral” call on the plantation sector due to an anticipation of bearish CPO prices in the second quarter and third quarter of this year, as well as the market tendency to have an underweight stance on plantation stocks.
Kenanga expects palm oil production to rise 17 per cent to 1.57 million tonnes this month.
It also expects CPO exports to improve three per cent to 1.35 million tonnes this month, with abundant supplies coming onstream and supportive shipments to other regions. However, CPO exports could be hampered by higher import tariffs by India.
Kenanga also expects CPO stock levels to rise one per cent to 2.5 million tonnes this month due to improvement in production.
MIDF Research has maintained a “positive” view on the plantation sector due to improved demand outlook for palm oil.
“We believe the good global economy growth this year should lead to higher consumption per capita.”
It believes that demand should improve from next month as winter has ended in the northern hemisphere.