KUALA LUMPUR: Fitch Solutions raised its average crude palm oil (CPO) price forecast for 2020 to RM2,580 a tonne from RM2,450 previously, with expectations of elevated prices for the rest of the year.
CPO is expected to average at RM2,600 over the rest of the year, from RM2,800 currently.
"Palm oil prices have proven resilient amidst the Covid-19 crisis and are on track to be one of the only commodities to average higher on a y/y basis, along with rice, wheat and coffee, ” according to a Oct 26 note.
“Palm oil has been outperforming among softs this year, and in particular since May, along with sugar”.
"Prices underpinned by decrease in global palm oil production in year ending Sept., caused by delayed impact of dry weather on trees; strong demand recovery in India, China following virus- related disruptions," Fitch Solutions said. Both these factors led to a draw-down in inventories.
Looking ahead, purchases from China, India will remain strong in the coming months.
Malaysian inventory levels have likely bottomed out as Southeast Asian output is on a strong recovery trend, but will remain depressed amid robust demand.
Price forecast for 2021 raised to RM2,580 from RM2,450 previously.
Global production anticipated to climb by 5.4% y/y in 2020-21 as yields recover from 2019’s drought, thanks to La Nina rains and higher fertiliser application. - Bloomberg
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