KUALA LUMPUR: CGS-CIMB Research has raised its 2020 crude palm oil (CPO) price forecast to RM2,500 from RM2,300 per tonne as the price rallies.
Spot prices climbed to as high as RM2,936 per tonne on Sept 3 from its year-to-date low of RM2,021 per tonne on May 12.
In a note, the research firm said this was due to concerns over tight global inventories as Indonesia’s second-quarter supply was below expectation.
However, it said the rising price has worsened the economic viability of biodiesel, which may affect the fulfillment of B30 biodiesel programme in Indonesia next year.
CGS-CIMB Research has also increased this year’s palm oil supply forecasts for Malaysia by 2% to 19.48 million tonnes from 19.1 million tonnes, with production growing 3% month-on-month (m-o-m) due to seasonal trends and 2% year-on-year to 1.86 million tonnes last month.
“We deem this to be above our full-year forecast of 19.1 million tonnes as the first eight months of 2020 accounted for 67% of our full-year 2020 forecast versus historical average of 63%, ” CGS-CIMB Research said.
The research firm also expected palm oil stocks to grow 2% m-o-m to 1.73 million tonnes at end of this month and output to grow 2% m-o-m, while exports to rise 1% m-o-m.
“We expect demand for palm oil for food consumption to improve ahead of the mid-autumn festival on Oct 1 (in China) and recovery in demand from the hotel, restaurant and cafe sectors, ” it said. — Bernama
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