KUALA LUMPUR: OCBC Bank has downgraded the outlook for crude palm oil (CPO) futures to RM2,250 per tonne by year-end, given the weaker prices of late.
In a note, OCBC said with supply growth likely to accelerate into this year while seasonal demand fade after the Ramadan celebrations, CPO prices were likely to see further downside risk into the second half of 2017.
“Palm oil futures failed to rally despite the recent Ramadan celebrations, which ended on June 24, 2017.
“Statistically, CPO exports from exporting countries were remarkably stellar, especially seen in Indonesia (April: 60.6 per cent) and Malaysia (10.2 per cent), year-on-year,” OCBC said in a outlook report for CPO.
OCBC said despite the healthy demand, prices continuedto fall as market-watchers were concerned over Malaysia’s balloning palm oil production.
Empirically, CPO production saw six consecutive months of positive growth with May’s production at its highest since October 2015.
OCBC estimated that Malaysia’s CPO production would rise by an estimated 15 per cent into 2017. — Bernama