SPEAKERS MOSTLY BULLISH ON CPO PRICE
Mistry holds most bearish view with projection of RM2,700 per tonne from July
MOST speakers attending the two-day Palm and Lauric Oils Price Outlook Conference 2021 said they remain bullish on crude palm oil (CPO) price outlook for the rest of the year.
Indonesian Palm Oil Association vice-chairman Togar Sitanggang said he remained optimistic and forecast CPO to trade at the RM4,100-RM4,715 per tonne range in the first half of this year.
Godrej International Ltd director Dorab Mistry, on the other hand, has the most bearish view as he expected the CPO price to fall drastically to RM2,700 per tonne from July.
Oil World editor and chief executive officer Thomas Mielke said he expected prices to start declining from the second quarter.
However, he said the decline would be moderate as long as stockpiles remained low.
LMC International managing director James Fry said Malaysia’s CPO production was expected to come in below 19.5 million tonnes this year, adding that CPO futures could trade at RM3,300 per tonne by year end.
He also noted that the European Union’s CPO-Brent spread should drop from US$700 at the moment to around US$450 by the fourth quarter, based on the Brent crude forecast of US$65 a barrel for the period.
“Mielke believes the peak has occurred (or will occur in four weeks), while Mistry thinks that edible oils’ price curve postApril-May is downwards,” said Kenanga Research analyst Adrian Kok.
“The speakers have forecast CPO price of more than RM3,000 per tonne except for Mistry.”
Kok said he concurred with the bearish view as the historical trends (peak in the first quarter of calendar year) might prevail, with market participants selling ahead of the expected price decline.
Public Investment Bank Bhd analyst Chong Hoe Leong said in general, the majority of the speakers concurred that the current CPO price momentum was likely to sustain in the first half of this year.
“Generally, they are quite divided but there are more bullish calls on the CPO price. Industry price forecasts range from RM3,300 to RM4,700 per tonne versus our own CPO price forecast of RM2,500 per tonne,” Chong wrote in a report yesterday.
Despite the bullish CPO price, most plantation stocks’ performance remained lacklustre as the market did not believe the current high CPO price was sustainable in the long term, he said.
He maintains an “upbeat” view on pure upstream players like Sarawak Plantation Bhd, TSH Resources Bhd and Ta Ann Holdings Bhd.
Hong Leong Investment Bank Bhd said palm production recovery might not be significant this year.
The research firm said its CPO price assumption of RM2,700 per tonne for 2021-2022 was notably lower compared to forecasts by speakers at the conference.