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Last Updated: 16 January 2024

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KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade with an upward bias next week given expectations of a weaker output due to seasonal factors, said palm oil trader David Ng.

He said the continued strength in external markets for soybean oil and crude oil is expected to boost market sentiment in the near term.

"We expect CPO futures to trade with an upward bias with prices looking to test the RM3,950 level. Support can be seen around the RM3,700 level," he told Bernama.

Meanwhile, Interband group of companies' senior palm oil trader Jim Teh said CPO is likely to trade between RM3,450 and RM3,550 per tonne next week.

He said China may resume the purchase of CPO ahead of the Chinese New Year next month.

This week, CPO futures traded higher amid positive sentiment over lower output expectations in the coming weeks, coupled with stronger crude oil prices.

On a weekly basis, the spot month January 2024 contract gained RM90 to RM3,780 a tonne, February 2024 added RM156 to RM3,831 a tonne, March 2024 rose RM174 to RM3,856 a tonne, April 2024 increased RM172 to RM3,843 a tonne, May 2024 edged up RM150 to RM3,799 a tonne, and June 2024 climbed RM123 to RM3,738 a tonne.

Total weekly volume improved to 385,530 lots from 233,557 lots in the preceding week, while open interest fell to 202,342 contracts from 212,004 previously.

The physical CPO price for January South rose RM150 to RM3,850 per tonne on Friday from RM3,700 a week earlier. -Bernama

https://www.nst.com.my/business/economy/2024/01/1001067/cpo-futures-likely-trade-upward-bias-next-week#google_vignette

Sumber : New Straits Times

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Last Updated: 27 June 2024

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KUALA LUMPUR (June 26): The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives snapped three consecutive days of losses to end higher on Wednesday on prospects of weaker production in the coming weeks, said palm oil trader David Ng.

“We see support at RM3,830 a tonne and resistance at RM3,980 a tonne,” he told Bernama.

Meanwhile, Fastmarkets senior analyst Sathia Varqa said the CPO futures traded higher in the second half session with the benchmark September contract rising RM35 to a high of RM3,894 a tonne, in anticipation of lower production data.

“The Southern Palm Oil Millers Association (SPPOMA) reported that the June 1-25 production was down by 5.62% from the corresponding period in May,” he said.

Sathia noted that the stronger CPO performance was also supported by a recovery in related edible oils on the Dalian Commodity Exchange (DCE).

According to reports, soybean oil futures closed higher on Wednesday in daytime trading at the DCE.

“The most active soybean contract for September 2026 delivery gained four yuan to close at 4,643 yuan per tonne, with total trading volume on the exchange amounting to 89,716 lots, and turnover of about 4.14 billion yuan,” it said.

At the close, the spot month July 2024 contract added RM29 to RM3,926 a tonne, August 2024 increased by RM20 to RM3,894 a tonne, and September 2024 was RM20 higher at RM3,879 a tonne.

October 2024 rose by RM19 to RM3,871 a tonne, November 2024 climbed RM20 to RM3,876 per tonne, and December 2024 gained RM19 to RM3,893 a tonne.

Total volume declined to 58,236 lots from Tuesday’s 65,240 lots, while open interest fell to 206,042 contracts from 211,517 contracts previously.

The physical CPO price for July South was RM30 higher at RM3,980 per tonne.

https://theedgemalaysia.com/node/716946

Sumber : The Edge Malaysia

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Last Updated: 18 June 2024

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KUALA LUMPUR: The slowdown in palm oil production may lead to a decline in inventory levels and positively impact global crude palm oil (CPO) price in the second half of the year, said analysts. 

According to the Malaysian Palm Oil Council (MPOC), CPO price will likely stabilise at RM3,900 per tonne this month. 

It said this was due to the expected drop in supply from Indonesia and Malaysia — the world's top two producers — in the second half of the year, coupled with an increase in exports.

However, it stressed that the anticipated price increase might hover around RM4,150 due to the United States' Agriculture Department (USDA) forecast of a surplus in oilseed production this year and in 2025.

"From January to May, Malaysia's CPO production increased by nine per cent year-on-year, or 626,000 tonnes, while exports rose seven per cent, or 393,000 tonnes," said MPOC.

By comparison, according to Indonesian Palm Oil Association (GAPKI) data. the country's CPO production fell by five per cent, or 647,000 tonnes, in the first quarter of the year.

Tradeview Capital Sdn Bhd fund manager Neoh Jia Man said the anticipated rise in exports indicated strong demand for palm oil, which was bullish for CPO price.

"We believe that stakeholders who consume a material amount of palm oil would seek to maintain an adequate inventory level and take advantage of the recent pullback in price to increase their stockpile.

"In addition, they could seek to diversify the supply sources or explore alternative vegetable oils," he added.

Neoh said the decline in Indonesia's CPO output was likely due to the El Nino phenomenon.

"It will have a material impact on global palm oil supply and coupled with the anticipated drop in output from Malaysia, we see upward pressure on global pricing." 

Meanwhile, MPOC observed that in the European market, the prices of rapeseed oil, sunflower oil, and soyabean oil increased by six, eight and seven per cent, respectively, in May, while CPO price fell by four per cent.

"As a result, the price premium of soft oils over palm oil increased from US$40 to US$115, which is expected to support the ongoing recovery of Malaysian palm oil exports," it noted.

Commenting on this, Neoh said the increased production and stockpile of oilseeds resulted in a greater availability of alternative vegetable oils.

"This will serve to cap the potential upside of CPO price as buyers could be encouraged to switch to cheaper alternatives.

"The broader availability of those alternative oilseeds will also temper the urgency by buyers to stockpile palm oil," he added.

https://www.nst.com.my/business/economy/2024/06/1063826/cpo-price-boost

Sumber : New Straits Times

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Last Updated: 17 April 2024

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KUALA LUMPUR: Crude palm oil (CPO) price is expected to start tapering off when the commodity's seasonal output recovery takes place. 

Hong Leong Investment Bank Bhd (HLIB) noted that the CPO price had averaged at RM4,062 per tonne year-to-date. 

Nevertheless, HLIB has maintained its CPO price assumptions for 2024 and 2025 at RM4,000 per tonne and RM3,800 per tonne. 

"Palm oil stockpiles are expected to resume an uptrend from April this year, as production will likely remain on an uptrend due to seasonality. 

"Meanwhile, exports are expected to weaken due to the absence of festive-driven demand and palm oil's weak price competitiveness against other competing oils," it said in a note. 

At the time of writing, HLIB said the discount of palm oil to soy oil had narrowed to US$89 per tonne, down from the six-month average of US$245 per tonne. 

As such, the investment bank maintained a "Neutral" stance on the sector, given the absence of notable demand catalyst.  

HLIB's top picks are IOI Corp Bhd with a "Buy" call and target price of RM4.66, while Hap Seng Plantations Holdings Bhd with a "Buy" call and target price of RM2.06. 

Palm oil stock level fell for the fifth consecutive month, by 10.7 per cent month-on-month (MoM) to 1.72 million tonnes in March 2024, the lowest since May 2023. 

This is as seasonally strong exports demand more than offset higher output. 

The stockpile came in lower than 1.76 million tonnes estimated in a Bloomberg survey, due mainly to stronger-than-expected exports. 

Meanwhile, palm oil production resumed its uptrend (for the first time since Oct 2023), rising by 10.6 per cent MoM to 1.39 million tonnes in March 2024. 

Cumulatively, first quarter of 2024 (1Q24) production increased by 3.4 per cent year-on-year (YoY) to 1.05 million tonnes, with fresh fruit bunch (FFB) yield and oil extraction rate (OER) rising to 3.5 tonnes per hectare and 19.66 per cent respectively. 

This is up from 3.35 tonnes per hectare and 19.52 per cent compared to the same period last year.  

This improvement is attributed mainly to the enhanced availability of labour, according to HLIB's assessment. 

Meanwhile, HLIB noted that exports recovered for the first time since October 2023, rising by 28.6 per cent MoM to 1.32 million tonnes in March 2024, boosted by stronger demand ahead of Ramadan and Eid ad-Fitr festivals.  

During March 2024, the sharp increase in exports was driven mainly by higher exports to India, Africa and Asia Oceania, according to Intertek Services.  

Cumulatively, 1Q24 exports declined marginally by 1.6 per cent YoY to 3.69 million tonnes, due mainly to lower exports to China. 

Intertek Services also indicated that Malaysia's palm oil shipment increased by 12.7 per cent MoM to 431,200 tonnes during the first 10 days of Apr 2024, led mainly by higher exports to Asia Oceania, European Union, and India. 

Echoing similar views, CIMB Securities anticipates palm oil supplies will remain tight in April due to fewer working days and a reduced workforce during the Hari Raya holidays.  

This, combined with higher usage of palm oil for biodiesel purposes in Indonesia is likely to keep palm oil export supplies tight until April 2024.  

"We project palm oil stocks to fall by 13 per cent MoM in April 24. 

"We are of the view that palm oil stocks could bottom out in April before rising in May due to the seasonal rise in palm oil supply and stiff competition from other edible oil substitutes (currently traded at a discount to palm oil).  

"However, competition with sunflower oil from the Black Sea region could ease slightly in the near term due to higher shipment costs to transport them to Asia owing to the threat of Houthi attacks," it added. 

CIMB also said in the second half of 2024 (2H24), palm oil supply could fall short of expectations due to the lower rainfall observed in some parts of the palm oil region since late Jan and the outbreak of sooty mold and mealybugs in Sabah palm oil plantations. 

This can cause up to 30 per cent decline in FFB yields for the affected area.  

It also said the anticipated transition from El Niño to La Niña (with a 60-80 per cent chance of development in 2H24) and the capacity to recruit foreign workers amid a current shortage of 40,000 workers will be crucial factors to monitor in the latter half of 2024. 

CIMB has maintained its average crude palm oil CPO price forecast for 2024 of RM3,900 per tonne.

https://www.nst.com.my/business/corporate/2024/04/1038410/cpo-price-taper-once-seasonal-production-recovers

Sumber : New Straits Times