CPO seen to trade above RM2,000 in near-term

By HANIM ADNAN

PETALING JAYA: Crude palm oil (CPO) is expected to trade above RM2,000 per tonne in the near term despite stock in June seen rising for the second consecutive month, say analysts.

Malaysian Palm Oil Board (MPOB), in releasing its latest figures yesterday, said palm oil inventory rose 2.5% to 1.41 million tonnes in June from 1.37 million tonnes in May.

The higher inventory also did not disrupt palm oil exports in June, which was marginally higher at 1.27 million tonnes from 1.23 million tonnes the month before.

MPOB said CPO production for the month under review was 1.44 million tonnes, up from 1.39 million tonnes in May.

HwangDBS Vickers Research said in its latest plantation report that palm oil yields would not be affected by the El Nino phenomenon in the near term but “it will be apparent in the next 12 to 18 months.”

The research unit also expects temporary supply disruptions by next month as palm oil harvesters in Malaysia and Indonesia start their month-long fasting and possible shutdown in milling and harvesting activities during the Eid festival.

In addition, active replanting activities and lower fertiliser application among smallholders may affect local palm oil supply this year.

MPOB has reduced its palm oil production forecast this year to 1.75 million tonnes from 1.77 million tonnes earlier.

HwangDBS Vickers, meanwhile, expects CPO prices to range between RM2,000 and RM2,500 per tonne for the rest of this year.

The anticipated increase in soybean production in the United States later this year and South America early next year partly due to El Nino had mostly been priced in the recent CPO price correction.

Independent cargo surveyor SGS reported that exports from July 1 to 10 had increased to 387,379 tonnes from 280,927 tonnes in the same June period.

Yesterday, third month CPO September contract on Bursa Derivatives Exchange closed RM37 lower at RM2,010 per tonne.