CIMB IB LOWERS FORECAST TO RM2,320

Global supply surpasses demand, persistently dragging the commodity’s prices

CIMB Investment Bank (CIMB IB) has lowered its palm oil price forecast from RM2,700 to RM2,320 per tonne as global supply surpasses demand, persistently dragging prices.

CIMB IB analyst Ivy Ng Lee Fang has maintained a “neutral” rating on the plantation sector while citing concerns over rising supplies. “The average crude palm oil (CPO) price fell 22 per cent to RM2,177 per tonne last month from a year ago. This represents the lowest monthly average CPO price, this year.”

“The average palm kernel price also fell to RM1,770 per tonne last month, placing it at a RM407 per tonne discount to CPO,” she said.

Since CPO price is currently trading below RM2,250 per tonne, Malaysia’s Customs allows taxfree flowout of CPO.

The analayst expects spot CPO price to trade in the RM2,100 to RM2,400 per tonne range.

“Despite higher shipment of palm oil to the European Union, Pakistan and India, we see prices remain unencouraging. High import duties on palm oil in India is a dampener on prices,” said Ng.

“The US Department of Agriculture had also raised its projection of local soyabean supplies by 7.5 million tonnes, or 6.4 per cent, to 124.8 million tonnes,” she said, adding this would be a new record high for this month to September next year.

“Palm oil prices are not likely to rise on stubbornly high stocks across Malaysia and Indonesia compared with a year ago and likely higher oil palm harvest in the last quarter of this year,” she added.

Ng projects this month’s palm oil stocks to rise to 2.66 million tonnes as seasonal fruiting would boost supply.