CPO climbs to highest since June 2018 as glut seen easing

The company told Bursa Malaysia yesterday that revenue for the current quarter improved year-on-year (y-o-y), mainly due to higher fresh fruit bunch (FFB) production from Indonesia, apart from the higher sales of refined palm products.

KUALA LUMPUR: Crude palm oil futures climbed to the highest level in more than seven months on optimism over shrinking inventories in the world’s top producers and a generally brighter outlook for the tropical oil.

At 2.50pm, it was up RM35 to RM2,341 per tonne, the highest since RM2,343 on June 28, Bloomberg data showed.

“Lower stockpiles in Indonesia and Malaysia provide strong fundamentals for palm oil prices,” said Sathia Varqa, owner of Palm Oil Analytics in Singapore. 

Indonesian data showing a slump in inventories in December are adding to the bullish momentum, which is also driven by gains in soybean oil in the past two days when the Malaysian market was shut, he added.

The positive view from leading analyst Dorab Mistry also adds to the bullish outlook, Varqa said. 

The analyst on Wednesday reiterated that prices may climb to RM2,400 a tonne by the end of March.

Indonesia palm oil stockpiles shrank 16% month-on-month to 3.26 million tons in December as production in world’s top grower dropped, according to Indonesian Palm Oil Association.

Total stockpiles in December were smallest since September 2017 and lower than 3.65 million forecast in Bloomberg survey.

Inventories in Malaysia seen dropping 6% in January month-on-month to 3.03 million tonnes, according to Bloomberg survey.

Palm oil in Malaysia may climb to RM2,400 by end-March if the ringgit remains at current levels, reiterates Mistry in New Delhi on Wednesday.

Palm oil stockpiles in Malaysia and Indonesia may decline to six million tonnes by April-May.