Crude palm oil (CPO) stockpiles are likely to fall below two million tonnes by the end of February, potentially pushing the commodity’s prices higher in the near term. Maybank Investment Bank (Maybank IB) Research has projected that CPO prices would briefly rise above RM4,200 per tonne within February and March before settling at lower levels in the second half (2H) of 2024.
The Malaysian Palm Oil Board (MPOB) showed January stockpile hit a six-month low at 2.02 million tonnes, down 12% month-on-month and 11% year-on-year (y-o-y), on seasonal decline in output, while exports remained resilient ahead of Ramadhan demand.
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Meanwhile, Hong Leong Investment Bank (HLIB) Research maintained its CPO price forecast at RM4,000 per tonne for 2024 and RM3,800 per tonne for 2025. It said it expected El Nino’s impact on palm production and prices to kick in around mid-2024.
HLIB Research kept its “neutral” stance on the sector, given the absence of notable demand catalyst. Kenanga Research was also “neutral” on the plantation sector, noting its valuation at 1.2 times price-to-book should be supportive against further substantial downside. But it added that there was no strong upside lift either. Kenanga Research maintained its forecast for average CPO price at RM3,800 per tonnes for 2024-2025. The growth in palm oil supply had moderated on falling yields, largely on ageing trees as well as slower new planting.
This is not sustainable. We need to focus on productivity and automate processes while understanding current markets and developing new ones. The EU will be biased against palm oil for various reasons. We could engage and neutralise sentiments or find other solutions. The initiative lies with private and government sectors and also other major suppliers like Indonesia working together with us.
Reference:
CPO likely to hit above RM4,200 per tonne soon, The Star, 15 February 2024
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