PETALING JAYA: Local spot crude palm oil (CPO) price could likely hit the RM5,000 per tonne mark in the near term, given the current powerful rally on the global commodities markets, says Malaysian Palm Oil Board (MPOB) director-general Dr Ahmad Parveez Ghulam Kadir.
On May 7, the physical CPO price recorded its best performance in the history of Malaysian palm oil sector. The commodity surged to RM4,758.50 per tonne after hitting an intraday high of RM4,800 per tonne and a low of RM4,640 per tonne.
The price recorded on May 7 also surpassed nine previous peaks of RM4,247 per tonne on March 15, RM4,270 per tonne on April 9, RM4,306.50 per tonne on April 21, RM4,376.50 on April 22, RM4,428.50 per tonne on April 23, RM4,502 per tonne on May 3, RM4,525.50 per tonne on May 4, RM4,548.50 per tonne on May 5 and RM4,652 per tonne on May 6.
Since March 15, the price of CPO has surged 12.03% in just two months, said Ahmad Parveez.
He noted that “the bullish performance of the CPO price was attributed to the increase in the price of soybean oil, rising exports of palm oil and palm oil stock that remain manageable.”
Ahmad Parveez told StarBiz that the spot CPO prices could hit the RM5,000 per tonne mark, which closely tracked the performance of the soybean oil prices (SBO) that is also on the uptrend currently.
“Based on the current fundamentals and market sentiments, the wider discount between CPO and SBO prices of above US$300 per tonne, stronger palm oil exports and the higher Brent crude oil prices, we cannot deny the possibility that the spot CPO price could soon hit the RM5,000 mark.
“Despite the recovery in palm oil production and marginal increase in palm oil stocks, the upward momentum of CPO price will continue to be supported by SBO prices and other fundamental factors.”
Ahmad Parveez also expects that CPO prices could remain elevated at least until the second quarter of this year due to the low palm oil stock levels, high palm oil exports and the strengthening of SBO prices in the world commodities markets.
Meanwhile, the CPO production has also recorded an increasing trend in April and is expected to peak in September.
Therefore, palm oil stocks will also increase in the coming months, added Ahmad Parveez.
On the other hand, Kenanga Research analyst Adrian Kok expects a possible correction in the price of CPO in the future after its current powerful rally.
“Our view is that the current CPO price should be correcting soon. Strong CPO price is due to strong palm export data and strong rival edible oil prices such as SBO, ” he said.
Meanwhile, on Bursa Malaysia, the Plantation Index soared 52.64 points to 7,150.13 yesterday. This was despite the FBM KLCI ending lower by 3.53 points to 1,583.92.
Sime Darby Plantation Bhd closed six sen higher to RM4.77 while IJM Plantations Bhd and Hap Seng Plantations Holdings Bhd advanced 11 sen each to settle at RM2.09 and RM2.07, respectively.