MARKET DEVELOPMENT
Crude Palm Oil to Trade RM2,950 in 2014
Crude Palm Oil to Trade RM2,950 in 2014
13/01/2014 (The Star) - UOB Kay Hian Malaysia Research expects crude palm oil (CPO) to average RM2,950 per tonne in 2014 on lower inventory level, tight supply and robust demand.
In its plantations industry outlook issued on Monday, it was maintaining its Overweight stance as CPO price was expected to gain upside momentum.
At midday, CPO for third month delivery slumped RM9 to RM2,508 which was the lowest since Nov 8, 2013.
“The commitments from the top two palm oil producers (Indonesia, Malaysia) to raise domestic biodiesel blend will ensure that the increase in palm oil supply in 2014 will be largely absorbed by biodiesel use, and hence keep inventory levels in check,” it said.
UOB Kay Hian Research said Malaysian palm oil inventory was 24.4% on-year lower at 1.99 million tonnes in 2013, lower than its expectation likely due to better-than-expected demand for palm oil in both domestic and export markets.
“Going into 2014, we expect inventory to stay in the range of 1.7 million to 2.1 million tonnes despite better CPO production of 19.4 million to 19.5 million tonnes on the back of better domestic demand for biodiesel use.
“CPO price in 2014 is expected to trade higher than the average of RM2,371 a tonne. Maintain Overweight,” it said.
The research house said Malaysia’s CPO production was expected to rise slightly in 2014 on yield improvement. It expected better CPO production of 19.4 million to 19.5 million tonnes in 2014 after a weak 2013 CPO production due to weak yield of older palm trees in Sabah.
In 2013, Malaysian Palm Oil Board (MPOB) reported CPO production of 19.2 million tonnes (up 2.3% on-year). Low production in December 2013 was 10.4% lower on-month and 6.4% lower on-year due to higher rainfall.
In its plantations industry outlook issued on Monday, it was maintaining its Overweight stance as CPO price was expected to gain upside momentum.
At midday, CPO for third month delivery slumped RM9 to RM2,508 which was the lowest since Nov 8, 2013.
“The commitments from the top two palm oil producers (Indonesia, Malaysia) to raise domestic biodiesel blend will ensure that the increase in palm oil supply in 2014 will be largely absorbed by biodiesel use, and hence keep inventory levels in check,” it said.
UOB Kay Hian Research said Malaysian palm oil inventory was 24.4% on-year lower at 1.99 million tonnes in 2013, lower than its expectation likely due to better-than-expected demand for palm oil in both domestic and export markets.
“Going into 2014, we expect inventory to stay in the range of 1.7 million to 2.1 million tonnes despite better CPO production of 19.4 million to 19.5 million tonnes on the back of better domestic demand for biodiesel use.
“CPO price in 2014 is expected to trade higher than the average of RM2,371 a tonne. Maintain Overweight,” it said.
The research house said Malaysia’s CPO production was expected to rise slightly in 2014 on yield improvement. It expected better CPO production of 19.4 million to 19.5 million tonnes in 2014 after a weak 2013 CPO production due to weak yield of older palm trees in Sabah.
In 2013, Malaysian Palm Oil Board (MPOB) reported CPO production of 19.2 million tonnes (up 2.3% on-year). Low production in December 2013 was 10.4% lower on-month and 6.4% lower on-year due to higher rainfall.