NUSA DUA, Indonesia: Malaysian crude palm oil prices are expected to rise to RM3,100 a tonne by January, as stockpiles remain lower than expected despite palm being in a high production cycle, said leading vegetable oils analyst Dorab Mistry on Friday.
Benchmark Bursa Malaysia crude palm oil futures climbed to their highest since Sept 15 earlier this week, but are down about 9% so far this year.
They were last up/down 0.6% at RM2,805 a tonne on Friday afternoon.
Mistry, the director of Indian consumer goods company Godrej International, added that prices of refined, bleached and deodorised (RBD) palm olein could reach US$750 a tonne on a free-on-board basis (FOB).
“If the soya crop in South America is affected, prices can rise by another US$50,” said Mistry at an industry conference in Bali, Indonesia.
He maintained an earlier forecast that crude palm oil prices would reach US$800 per tonne CIF Rotterdam by January, with the potential to hit US$850 by March 2018, on tight inventory levels and a weaker-than-expected production recovery in Malaysia and Indonesia.
September end-stocks in Malaysia, the world’s second-largest producer after Indonesia, breached the 2 million tonne mark for the first time in well over a year. However, stockpiles remain below the September levels in 2014 and 2015.
For lauric oils, crude palm kernel oil (CPKO) prices may rise slightly from April to June next year, according to Mistry, but will decline to a range of US$800 to US$1,000 per tonne CIF Rotterdam from July as stocks would build.
Mistry also maintained his forecasts from last month for Indonesian output to rise to between 36.5 million to 37 million tonnes in 2018, while he expects Malaysia’s production to edge up to 19.97 million tonnes as crops shake off the lingering effects of dry weather triggered by the 2015 El Nino.
Indonesia and Malaysia produce nearly 90% of global palm oil supplies.
In the longer term, Mistry expects gains in plantation and palm oil prices on limitations to acreage expansion.
“Malaysia has reached the limit... Indonesia now has a moratorium. Expansion has slowed from 500,000 hectares per year to 150,000 hectares per year,” said Mistry. ”From 2021 to 2022 plantation prices and palm oil prices will have to rise much higher.” - Reuters
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