CPO prices to improve momentarily to RM3,000 per tonne in 1Q18

KUALA LUMPUR: The price of crude palm oil (CPO) could gain momentarily to RM3,000 per tonne into the first quarter 2018, in line with the shortfall in seasonal production, and dip to around RM2,650 per tonne at year-end.

According to the OCBC Bank 2018 Commodity Outlook report, the upside in palm oil prices appears limited in 2018, with supplies clearly abundant at this juncture as Malaysia’s inventory touches the 2.6 million tonnes handle, the highest since December 2015.

“Demand outlook this year also appears relatively tame, despite the likely uptick in risk appetite and global growth. With the absence of any weather extremity in 2018, CPO prices could trend similarly to this year’s trajectory,” it said.

The report said as of year-to-date, Malaysia’s crude palm oil production stood at 14.1 per cent on a year-on-year basis, as the palm oil industry recovered from an El-Nino led production shortfall in 2016.

Meanwhile, Indonesia, as the world’s biggest exporter of palm oil, plans to increase production to 42 million tonnes by 2020 to maintain its global lead.

“This is starkly higher compared to the 35 million tonnes of palm oil produced in 2016,” it added. — Bernama

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