CPO seen trading at RM3,200-RM3,700 per tonne in March
04.03.20121 (www.thestar.com.my) - KUALA LUMPUR: CGS-CIMB Research expects crude palm oil (CPO) price to trade at between RM3,200 and RM3,700 per tonne in March 2021.
This is in view of projected low inventory in Malaysia, which will take time to rebuild, and recovery for palm oil supply in the second quarter of 2021 as weather conditions normalise.
The research house said the average CPO price rose 4% month-on-month (m-o-m) and 44% year-on-year (y-o-y) to RM3,897 per tonne in February on concern over low inventory level of palm oil and global edible oils supplies.
“We maintain our ‘neutral’ rating on agribusiness with an average CPO price forecast of RM2,900/RM2,700 per tonne for 2021/2022, ” it said in a note.
CGS-CIMB Research estimates that palm oil export fell 6% m-o-m and 18% y-o-y in February 2021 to 0.89 million tonnes due to high selling prices for CPO and tight supply in Malaysia.
“Data from cargo surveyor SGS revealed weaker exports to China and the United States, while the increase in India’s effective import duties on CPO could also affect the demand appetite for palm oil, ” it added.
In addition, the research house said weaker production in February was impacted by shortage of foreign workers and seasonal factors.
However, its projection of a flat m-o-m CPO output of 1.13 million tonnes in February 2021 is better than the historical trend of a 6.8% m-o-m fall in February output over the past 10 years due possibly to crop recovery.
“Our survey revealed that Sabah’s estates posted the widest m-o-m drops in production while Peninsular Malaysia posted the strongest m-o-m rise in output.
“Our February output estimate of 1.13 million tonnes is lower than the past 10-year average of 1.3 million tonnes, ” it said.
Meanwhile, CGS-CIMB Research expects Malaysia’s palm oil inventory to grow 7.6% m-o-m but decline 16.2% y-o-y to 1.43 million tonnes at end-February 2021 due to a slower decline in production compared to exports.
“This is a deviation from the historical trend whereby palm oil stocks typically declined in February at an average of 3% m-o-m over the past 10 years.
“This could be due to demand rationing by consumers and shift in palm oil sourcing from Indonesia owing to the latter’s improving output, ” it added. — Bernama