KUALA LUMPUR, Feb. 13 (Xinhua) -- Crude palm oil (CPO) prices in Malaysia are projected to ease in 2023 on stocks normalization, analysts have foreseen on Monday.

MIDF Research said in a note that it expects Malaysian local delivery prices for CPO to be lower in 2023, ranging between 3,000 ringgit (687.76 U.S. dollars) and 4,000 ringgit, on expectation of normalization closing stocks of 2 million tonnes to 2.1 million tonnes.

It said the CPO price is expected to trade volatile in February to March at circa 3,500 ringgit per tonne to 4,000 ringgit per tonne, benefiting from price disparity between CPO against soybean oil price which to-date amounted 445 U.S. dollars per tonne and 3 years average of 246.2 U.S. dollars per tonne, based on 3-month future price.

However, it also recognizes its downside risk for CPO on fragile demand outlook on the back of inflationary pressure coupled with tight household spending on high base interest rate locally and globally and another Indonesian extension of zero-levy policy for palm oil exports in 2023.

Meanwhile, Maybank Investment Bank reiterated its view in a note that CPO price will ease by mid-year on expectation of seasonal output recovery.

It projected CPO average price to ease to 3400 ringgit per tonne this year from 5088 ringgit per tonne in 2022.

However, it said CPO price is likely to stay supported at current level of about 4,000 ringgit per tonne till end-of-first quarter this year as palm oil production is presently in its low output cycle.

In addition to that, it said ahead of the Ramadhan and Eid holidays demand, the Indonesian government recently introduced several measures to ensure sufficiency of cooking oil within the country.

CGS CIMB also expects CPO price to soften in the second half and maintain its average CPO price forecast of 3,800 ringgit per tonne in 2023.

However, it said CPO price is likely to be supported in near-term due to concerns that palm oil exports from Indonesia could be limited due to rising cooking oil prices.

It expects CPO price to trade in the 3,700 ringgit to 4,200 per tonne range in February.

Meanwhile, Affin Hwang Investment Bank said in a note that it is keeping its CPO average selling price assumptions of 3,100 ringgit to 3,200 ringgit per tonne for 2023.

According to the research house, the rising supply of vegetable oils into the market has put pressure on prices.

Also, it believed the looming global recession could potentially curb consumption in many markets, but this may be partially mitigated by rising demand from the biodiesel industry.

Overall, it said there are many uncertainties and price-determining factors to watch out for, which include the global harvest progress and actual yields achieved for all major edible oils; level of purchases from major importing countries especially countries like China and India; changes in biodiesel mandates; weather developments; and Malaysia and Indonesia's production and stock movements.

The average Malaysian Palm Oil Board locally-delivered CPO price in January stood at 3,922 ringgit per tonne, a decline of 1 percent month on month. (1 ringgit equals 0.23 U.S. dollar) Enditem

Related

Go to Forum >>0 Comment(s)