SAWIT: CPO price may remain high until June 2022, says HLIB
KUALA LUMPUR: Crude palm oil (CPO) price is expected to remain at elevated levels, possibly until the first half of 2022 (1H22), said Hong Leong Investment Bank Bhd (HLIB).
This will be supported by weaker production outlook for corn and soybean in South America as well as geopolitical tension.
HLIB said the geopolitical tension would likely result in supply disruption in sunflower and rapeseed oils, as well as protracted fertiliser supply.
Over the longer term, HLIB continues to believe that a pullback in CPO price will materialise when palm oil output recovers, which in turn hinges on the entrant of foreign workers into Malaysian shores.
"Based on our estimates, every RM100 per tonne raise in our CPO price projection will lift earnings forecasts for plantation stocks under our coverage by 3.5-15.0 per cent," it said.
HLIB said palm oil stockpile remained on downtrend for the fifth consecutive month, declining by 3.0 per cent month-on-month (MoM) to 1.47 million tonnes in March 2022.
This was driven by the output recovery being more than offset by higher exports and domestic consumption, coupled with lower imports, it said.
"We maintain 2022 to 2024 CPO price assumptions of RM4,300/RM3,300/RM3,300 per tonne.
"Overall, we reiterate our Overweight stance on the sector, underpinned by high near term CPO prices (which will in turn translate to good near term earnings prospects), easing environmental social governance (ESG) concerns and decent valuations," it added.
https://www.nst.com.my/business/2022/04/787964/cpo-price-may-remain-high-until-june%C2%A02022-says-hlib
Sumber: New Straits Times
