MARKET DEVELOPMENT
Kenanga Research Maintains Average CPO Price For 2015
Kenanga Research Maintains Average CPO Price For 2015
31/10/2014 (Bernama) - Kenanga Research has maintained its outlook for average crude palm oil (CPO) price at RM2,500 per tonne for 2014 and 2015 due to lower inventory estimate by end-2015.
In a note Thursday, the research firm said the inventory could decline to a critical level of 1.5 million tonnes next year as supply issue had been underestimated.
"August 2014's peak production is unlikely to be repeated in the next six to 12 months," it said.
Malaysia's palm oil inventory in August climbed 21.9 per cent to 2.05 million tonnes from 1.68 million tonnes in July due to surge in production and fall in exports, said Malaysian Palm Oil Board.
Kenanga Research said the fourth quarter 2014 production was likely to unexpectedly decline quarter-on-quarter (q-o-q) against past pattern of increase q-o-q and the market has yet to price this in.
During the Palm Oil Trade Fair and Seminar 2014 yesterday, Godrej International Ltd director, Dorab Mistry, predicted that CPO prices should gradually increase to RM2,500 by March-2015, with demand likely to stay strong due to the food segment.
However, he said, production was likely to be impacted by the dry season.
Oil World's vegetable oil analyst, Thomas Mielke, estimated that global vegetable oil should see strong incremental demand of 6.3 million tonnes for 2014 and 2015 season, due to the food segment benefitting from population and income growth.
"On the demand side, we concur with Dorab Mistry and Thomas Mielke that palm oil demand is likely to stay strong due to support from the food segment," said Kenanga Research.
Overall, the research firm maintained its 'neutral' call on the plantation sector as the current share prices for planters were already reflecting CPO price recovery to RM2,500 per tonne in 2015.
In a note Thursday, the research firm said the inventory could decline to a critical level of 1.5 million tonnes next year as supply issue had been underestimated.
"August 2014's peak production is unlikely to be repeated in the next six to 12 months," it said.
Malaysia's palm oil inventory in August climbed 21.9 per cent to 2.05 million tonnes from 1.68 million tonnes in July due to surge in production and fall in exports, said Malaysian Palm Oil Board.
Kenanga Research said the fourth quarter 2014 production was likely to unexpectedly decline quarter-on-quarter (q-o-q) against past pattern of increase q-o-q and the market has yet to price this in.
During the Palm Oil Trade Fair and Seminar 2014 yesterday, Godrej International Ltd director, Dorab Mistry, predicted that CPO prices should gradually increase to RM2,500 by March-2015, with demand likely to stay strong due to the food segment.
However, he said, production was likely to be impacted by the dry season.
Oil World's vegetable oil analyst, Thomas Mielke, estimated that global vegetable oil should see strong incremental demand of 6.3 million tonnes for 2014 and 2015 season, due to the food segment benefitting from population and income growth.
"On the demand side, we concur with Dorab Mistry and Thomas Mielke that palm oil demand is likely to stay strong due to support from the food segment," said Kenanga Research.
Overall, the research firm maintained its 'neutral' call on the plantation sector as the current share prices for planters were already reflecting CPO price recovery to RM2,500 per tonne in 2015.