KUCHING: RAM Ratings has revised its price outlook for crude palm oil (CPO) the fourth quarter of 2014, expecting the price will average between RM2,100 per metric tonne (MT) and RM2,300 per MT.
“This is premised on our view that the record vegetable oil production will continue to suppress CPO prices,” it said in a statement yesterday.
“Accordingly, we have also revised our price forecast for the full year to around RM2,400 per MT to RM2,500 per MT.”
The ringgit-denominated price came in 3.9 per cent below the lower end of RAM Rating’s RM2,300 to RM2,500 projection.
In August 2014, the daily CPO price plunged to a five-year trough, coming in below RM2,000 per MT.
The drastic and unexpected drop mirrored price action in respect of competing oil seeds such as soybean, which had seen a bumper harvest.
“The production of these oil seeds is anticipated to come in at around 530 million MT for 9M 2014.”
Meanwhile, Malaysian palm oil stock had risen to above 2 million MT since August 2014 as the industry moved into its peak production cycle and production was unaffected by earlier anticipated El Nino weather conditions.
The country’s CPO production had exceeded the Malaysia Palm Oil Board’s (MPOB) forecast for 9M 2014 by 3.16 per cent.
As 4Q is still a seasonally high production period, we do not expect the stockpile to ease substantially. As such, CPO prices are not likely to see any significant upside.