CPO to trade at RM3,000 per tonne in next six to eight months

KUALA LUMPUR: Malaysia’s crude palm oil ( CPO) price is expected to fetch around RM3,000 per tonne over the next six to eight months, says leading industry analyst Dorab Mistry.

The forecast was based on various factors, including crude oil price assumption of US$ 45 ( US$ 1= RM4.45) to US$ 65 per barrel this year, and the possibility of an interest rate hike in the United States.

“I am quite bullish on the price outlook for CPO and also the ringgit,” he said in his presentation on ‘Palm Oil Tsunami and Price Outlook 2017’ at the Palm and Lauric Oils 2017 Conference and Exhibition here yesterday.

Mistry said CPO price was expected to drop to RM2,500 per tonne in the fourth quarter of this year, depending on weather conditions.

“Weather is paramount. At this stage, I would go with the alternative bullish scenario, purely because I fear palm production recovery may take longer due to weather problems,” he said.

Mistry said the Donald Trump administration had indicated that it would encourage the repatriation of profits held overseas by US companies, amounting to around US$ 2 trillion.

“If that happens, the rest of the world would be minus US$ 2 trillion, interest rates in those regions would rise and some might be pushed into recession.

“Commodity prices could fall against such a scenario,” he said.

On stocks, Mistry said inventories would remain tight until July 2017, as Muslim countries celebrating the fasting month of Ramadan would have stocked up and shipment would go out in the second week of May.

However, the industry would be facing strong competition from the South American soyoil.

The possibility of an Indian Ocean Dipole weather condition, which may lead to a drought in India, would also affect CPO prices and production, going forward, he said.