CPO prices to trend higher in 1H24 and potentially trend lower in 2H24
Crude palm oil (CPO) prices are expected to trend higher in the first half of 2024 (1H24) and potentially trend lower in 2H24 says analysts.
According to analysts at Maybank Investment Bank Bhd (Maybank IB Research) and MIDF Amanah Investment Bank Bhd (MIDF Research), while CPO prices in January are expected to be flattish, CPO prices in February and March might end up trend higher than RM4,000 per metric tonne (MT) as both research arms are foreseeing palm oil stocks to ease during the period and favourably affect CPO prices.
Maybank IB Research reported that the Malaysian Palm Oil Board’s (MPOB) latest figures showed that January’s stockpile has eased seasonally to six month low of 2.02 MT.
This was a 12 per cent month on month (m-o-m) and 11 per cent year on year (y-o-y) drop and the negative growth was wider than expected as it was below market expectations of 2.09 MT stockpile at the end of January.
“The lower stockpile was due to resilient January exports which grew by 1 per cent m-om or 19 per cent y-o-y to 1.35 MT while production continued its seasonal decline by -10 per cent m-o-m or 2 per cent y-o-y growth 1.40 MT.
“Meanwhile, Jan’s consumption eased by -4 per cent m-o-m to 0.35 MT while imports dipped sharply by -25 per cent m-o-m or -81 per cent y-o-y,” the research arm explained.
Maybank IB Research expected palm oil stockpiles to continue declining in the near-term and possibly ease below 2.0 MT threshold by the end of February should exports during the month be sustained around 1.1 to 1.2 MT.
“This will help further strengthen CPO price in the short term on tightness in supply,” said the research arm.
Similarly, MIDF Research forecast that CPO prices might close at RM3,900 per MT in February and potentially cross the RM4,000 per MT threshold in 2Q24 to nearly RM4,500 per MT.
MIDF Research believed that developing mild El-Nino events forecast by the Malaysian Metrological Department (MET Malaysia) could pose risks to crop productivity in 2Q24 which would create a favourable trajectory for CPO prices during the period and beyond.