‘Global CPO output set to rise to 70.84m tonnes’
KUALA LUMPUR: Analysts at the 29th Palm and Lauric Oils Price Outlook Conference and Exhibition yesterday gave a bearish forecast for palm oil prices in the coming months.
Since the beginning of the year, palm oil futures on the Bursa Malaysia Derivatives Market have averaged at RM2,500 per tonne.
Oil World executive director Thomas Mielke said global palm oil production was expected to rise to 70.84 million tonnes this year from 67.87 million tonnes last year.
He estimated M a l ays i a’s p a lm o il output to top 20.76 million tonnes this year, 4.2 per cent higher than the 19.92 million tonnes last year.
Indonesia and Malaysia account for about 85 per cent of global palm oil output.
Mielke said prices of palm oil and its rival, soyabean oil, were likely to trade sideways or slightly higher in the next three to five weeks but weakness would emerge from the end of next month.
“Palm oil prices are expected to trade range-bound between US$600 and US$630 (RM2,340 and RM2,457) a tonne this year.”
In a paper entitled “CPO price outlook: A practitioner view of the market and Indonesia’s policies and implementations”, Triputra Agro Persada Group cofounder and chief executive officer Arif P. Rachmat said Indonesia’s palm oil exports totalled US$23 billion last year.
Arif expects palm oil prices to remain stable at between US$600 and US$650 per tonne by the third quarter of this year.
“We see strong production across Indonesia and Malaysia. With strong production and firm global demand, we see stocks across Indonesia, Malaysia, India and China moderating from 7.8 million tonnes in December last year,” he said.
Meanwhile, LMC International Ltd chairman Dr James Fry said palm oil prices would continue to be influenced by crude oil prices.
When vegetable oil prices near that of crude oil, biodiesel production and direct burning of vegetable oils become increasingly attractive options.
Fry said as long as Organisation of the Petroleum Exporting Countries carried on with supply cuts to support Brent crude oil at between US$65 and US$70 per barrel, edible oils would continue to trade above US$500 per tonne.
“Indonesia’s Estate Crop Fund has been a game changer since it was launched in 2015 as it is a key to support palm oil prices when funds are channelled to boost biodiesel usage there.
“I see palm oil prices rising briefly to RM2,600 per tonne and settling at RM2,300 by July,” he added.