“By the middle of this year, palm oil prices are expected to surpass RM2,600 per tonne from the current average of RM2,400.”
ALAN LIM SEONG CHUN, MIDF Amanah Investment Bank Bhd senior analyst
INVESTMENT banks are cautiously optimistic about the price of palm oil, expecting it to surpass RM2,600 per tonne by the middle of this year from RM2,400 currently, thanks to firm global demand.
“Global palm oil demand is expected to rise as the supply of its rival soya bean is on a slight decline,” said MIDF Amanah Investment Bank Bhd senior analyst Alan Lim Seong Chun.
According to Oil World, dry weather in Argentina had slashed soya bean supply by 32 per cent to 37 million tonnes.
This year, the United States Department of Agriculture estimated American soya bean planted area to shrink by one per cent to 36 million hectares.
“This has caused soya bean prices to rise in the past few months but the impact has not been translated into higher prices for soya bean oil in view of the sufficient vegetable oil inventory globally,” he said at a market forum organised by the Malaysian Palm Oil Council (MPOC), here, yesterday.
Also present were MPOC chief executive officer Datuk Kalyana Sundram, MPOC marketing and market development director Faudzy Asrafudeen Sayed Mohamed and Bursa Malaysia Derivatives senior vice-president of commodity derivatives product development Moriazi Mohamad.
Lim said another factor contributing to rising palm oil prices was heightened global demand in view of Ramadan next month and Hari Raya Aidilfitri in June.
He said Malaysia’s palm oil stockpile was expected to settle at 2.13 million tonnes by the end of this month.
“By the middle of this year, palm oil price is expected to surpass RM2,600 per tonne from the current RM2,400.”
RHB Investment Bank economist Vincent Loo expects palm oil price to average at RM2,550 per tonne as global usage of biodiesel increases.
Palm oil is expected to trade in tandem with Brent crude futures, which have been trading above US$70 (RM272) per barrel for the past month.
Moriazi said crude palm oil futures (FCPO) on Bursa Malaysia had recently been tweaked for the convenience of vegetable oil traders.
“We have increased FCPO’s position limits, added 30 minutes of trading time and more contract months, and allow for palm oil traceability to the mills,” he said.