In a report today, MIDF Research said unresolved labour shortages due to border closure and the implementation of Movement Control Order rules on agribusiness could also strengthen the CPO price. However, it is expected not to ease drastically below the RM2,500 level.

KUALA LUMPUR: Crude palm oil (CPO) price is likely to reach RM3,200 per tonne this year, supported by upbeat export demand, slow production growth and firm demand for palm oil-based biodiesel, said MIDF Research.

In a report today, MIDF Research said unresolved labour shortages due to border closure and the implementation of Movement Control Order rules on agribusiness could also strengthen the CPO price. However, it is expected not to ease drastically below the RM2,500 level.

"We believe the palm oil supply tightness situation will likely remain at least until the third quarter of this year, given the slow growth of output.

"On the demand front, we believe replenishment activities to import more palm oil will continue to be healthy into 2021 on the back of more reopening of economic activities," said MIDF Research.

However, CPO price may soften in the second half of 2021 in anticipation of production recovery due to better weather conditions and gradual stockpiles improvement as it nearly enters the peak crop season and higher production of soybean.

Nonetheless, MIDF Research said palm oil supply tightness situation to continue to support favourable CPO price despite the easing concern.

The average selling spot price (ASP) of CPO in the first quarter (Q1) this year stood at RM3,926 per tonne compared to RM2,670 per tonne in the same period last year.

MIDF Research said this was attributed to the better price of soybean oil (due to weather woes in South America) and low inventory level despite increased production and higher export demand during the quarter-under-review.

The higher export demand in Q1 was primarily due to restocking activities from China and India (ahead of the month of Ramadhan).

"But, fresh fruit bunch (FFB) production remains flattish because of labour shortage and adverse weather condition."

CPO export demand improved in March 2021, with the total export demand reached above 1.0 million tonnes, driven by restocking activities from China and India.

"We expect slower growth of export demand from India due to lockdown. However, for the past two months, China has shown an upbeat performance, where export demand jumped by 52.8 per cent month-on-month (MoM) in April and edged up by 30 per cent MoM mom in May.

"This could be attributable to the approval of China's new standards for premium palm oil."

MIDF Research said China to remain a bright spot in export demand.

"We believe replenishment activities to import more palm oil will continue to be healthy into 2021 due to the recovery of economic activities globally given the acceleration of vaccination programme."

https://www.nst.com.my/business/2021/06/702059/cpo-reach-rm3200-tonne-2021-midf-research
Sumber : New Straits Times