CPO price expected to do better in longer term

CRUDE palm oil (CPO) price is likely to trade around RM2,500 a tonne, but could do better in the next few months, Malaysian Palm Oil Council (MPOC) chairman Datuk Lee Yeow Chor said.

"Cargo surveyors' reports show that January exports are 20 per cent higher than in December. With the recent floods in Sabah, output is affected and the multiplier effect on palm oil prices can be significant. "Therefore, prices are not likely to slide further and should find strong support at RM2,400 per tonne," he told reporters at an MPOC seminar in Subang Jaya, Selangor, yesterday.

"We're now entering the low seasonal output months of February and March. As stock levels deplete, it is foreseeable that prices could trade at a higher band of between RM2,500 and RM2,700 per tonne towards the middle of the year."

Yesterday, the third month benchmark palm oil futures traded on the Bursa Malaysia Derivatives market inched RM7 higher to close at RM2,452 a tonne.

Teoh Gim Meng, citing recent high stock levels published by the Malaysian Palm Oil Board, had a bearish outlook on palm oil prices in the short term.

A trader, analyst and broker with CIMB Group, Teoh said: "Last year saw a demand-driven market. But now, we see ample supply of vegetable oils in the global market. Argentina, Paraguay, Brazil and the US are experiencing record output of soyaoil.

"Prices could slide further and the next support level is at RM2,280 per tonne. If the downtrend persists, it could fall as low as between RM2,100 and RM2,150 per tonne. Don't forget: last year, the RM2,100 level was tested twice." On a longer term of four to six months, Teoh was just as hopeful as Lee that palm oil prices could rise to as high as RM2,700 a tonne.

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