KUALA LUMPUR, Feb 13 (NNN-BERNAMA) – Crude palm oil (CPO) prices in Malaysia, are projected to ease this year, on stocks normalisation, analysts have foreseen today.
MIDF Research said in a note that, it expects Malaysian local delivery prices for CPO to be lower this year, ranging between 3,000 ringgit (687.76 U.S. dollars) and 4,000 ringgit, on expectation of normalisation closing stocks of two million tonnes to 2.1 million tonnes.
It said, the CPO price is expected to trade volatile in Feb to Mar, at circa 3,500 ringgit per tonne to 4,000 ringgit per tonne, benefiting from price disparity between CPO against soybean oil price, which to-date amounted 445 U.S. dollars per tonne and three years average of 246.2 U.S. dollars per tonne, based on a three-month future price.
However, it also recognises its downside risk for CPO on fragile demand outlook, on the back of inflationary pressure, coupled with tight household spending on high base interest rate, locally and globally, and another Indonesian extension of zero-levy policy for palm oil exports.
Meanwhile, Maybank Investment Bank reiterated its view in a note that, CPO price will ease by mid-year on expectation of seasonal output recovery.
It projected CPO average price to ease to 3,400 ringgit per tonne this year, from 5,088 ringgit per tonne in 2022.
However, it said, CPO price is likely to stay supported at current level of about 4,000 ringgit per tonne till end-of-first quarter of this year, as palm oil production is presently in its low output cycle.
In addition to that, it said, ahead of the Ramadhan and Eid holidays demand, the Indonesian government recently introduced several measures to ensure sufficiency of cooking oil within the country.
CGS CIMB also expects CPO price to soften in the second half and maintain its average CPO price forecast of 3,800 ringgit per tonne in 2023.
However, it said, CPO price is likely to be supported in near-term, due to concerns that palm oil exports from Indonesia could be limited, due to rising cooking oil prices.
It expects CPO price to trade in the 3,700 to 4,200-ringgit-per-tonne-range in Feb.
Meanwhile, Affin Hwang Investment Bank said in a note that, it is keeping its CPO average selling price assumptions of 3,100 ringgit to 3,200 ringgit per tonne for 2023.
According to the research house, the rising supply of vegetable oils into the market has put pressure on prices.
Also, it believed the looming global recession could potentially curb consumption in many markets, but this may be partially mitigated by rising demand from the biodiesel industry.
Overall, it said, there are many uncertainties and price-determining factors to watch out for, which include the global harvest progress and actual yields achieved for all major edible oils; level of purchases from major importing countries, especially countries like China and India; changes in biodiesel mandates; weather developments; and Malaysia’s and Indonesia’s production and stock movements.
The average Malaysian Palm Oil Board locally-delivered CPO price in Jan stood at 3,922 ringgit per tonne, a decline of one percent month on month.– NNN-BERNAMA