11.01.2024 (Xinhua) - KUALA LUMPUR, Jan. 11 (Xinhua) -- Analysts have on Thursday maintained crude palm oil (CPO) price forecasts amid falling stockpiles in Malaysia.

Hong Leong Investment Bank Research said in a note that it maintained 2024 and 2025 CPO price assumptions of 4,000 ringgit (862 U.S. dollars) per ton and 3,800 ringgit per ton, respectively, as it expects El Nino's impact on palm production and prices to kick in around mid-2024.

According to the research house, Malaysia's palm oil stockpile will likely remain above 2 million tons in January 2024 as seasonally low production, which started in November 2023, will be offset by weak near-term demand prospects.

The weak near-term demand prospects are arising from CPO's unattractive price discount against soybean oil, less favorable POGO spread (price spread between palm oil and gas oil) which will curb palm-based biodiesel blending, and high stock levels among key vegetable importing countries.

Maybank Investment Bank also maintained its CPO average selling price forecast of 3,700 ringgit per ton for 2024 which is below 2023's 3,810 ringgit per ton, premised on good South American soybean harvest, and anticipated lower year-on-year unit cost.

In terms of price trend, the research house expects CPO to be off to a good start in the first quarter owing to the seasonally low output cycle, and to trend lower by mid-2024 in anticipation of seasonally better output in the second half.

Affin Hwang Investment Bank also maintained its CPO average selling price assumption of 4,200 ringgit to 4,400 ringgit per ton for 2024.

The research house expects the price volatility to persist in 2024 given the many uncertainties surrounding the agriculture industry as well as the global economy.

"Some of the factors to watch out for in 2024, in our view, include the weather and its impact on crop production, global inventory of edible oils, demand for edible oils (in the food and biofuel industry), biodiesel mandates worldwide and changes in policies," it said.

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