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CPO price to trade between RM3,800-4,300 per tonne in March, says CGS-CIMB Research
calendar13-03-2023 | linkNew Straits Times | Share This Post:

13/03/2023 (New Straits Times), Kuala Lumpur - The domestic crude palm oil is expected to trade in the RM3,800-RM4,300 per tonne range this month, driven by the severity of the floods in Johor and its potential impact on Malaysia's palm oil output.

 

CGS-CIMB Research noted that Malaysia's palm oil stocks fell by seven per cent month-on-month (MoM) to a six-month low of 2.12 million tonnes as of end-February 2023 due mainly to lower production and imports.

 

Palm oil output fell nine per cent MoM to 1.25 million tonnes in February this year due mainly to seasonal factors and fewer working days.

 

However, palm oil output grew 10 per cent year-on-year (YoY) in February and in the two months (2M) of 2023 due to higher fresh fruit brunch (FFB) yields, coupled with the easing of the worker shortage issue.

 

"The MoM and YoY changes in production were in line with our prediction, as per our stock preview note released on 6 March.

 

"Crude palm oil imports fell 64 per cent MoM and 65 per cent YoY to 52,000 tonnes in February  – lower than our prediction," the research firm said.

 

 

This is due to the Indonesian government's suspension of some palm oil export permits before the Lebaran festival.

 

On the other hand, palm oil exports fell two per cent MoM but rose two per cent YoY to 1.11 million tonnes in February, likely due to weaker demand from key consumers like India and China due to high palm oil stocks in their respective countries.

 

"The stock level in Malaysia in end-February 2023 of 2.12 million tonnes was 3.8 per cent/4.9 per cent/4.1 per cent below our/Bloomberg/Reuters estimates of 2.20 million/2.23 million/2.21 million tonnes, due mainly to lower imports and higher local usage.

 

"We project palm oil stocks to fall by 13 per cent MoM to 1.84 million tonnes by end-March 2023 due to higher export demand ahead of the Lebaran festival and slower MoM growth in supply due to floodings in Johor since 1 Mar 2023," CGS-CIMB Research noted.

 

The research firm has maintained a 'Neutral' stance on the sector and noted that the floodings in Johor would curb output growth.

 

Johor produced around 16 per cent of Malaysia's palm oil output in 2022.

 

"Overall, we expect CPO price to soften in the second half (2H) and maintain our average CPO price forecast of RM3,800 per tonne in 2023.

 

"However, there could be an upside to our price forecasts should El Nino return in 2H of 2023," the research firm noted.

 

https://www.nst.com.my/business/2023/03/888641/cpo-price-trade-between-rm3800-4300-tonne-march-says-cgs-cimb-research?utm_source=nst&utm_medium=mostpoplatest