Palm oil prices likely to hit RM3,200 by year-end


PUTRAJAYA: PALM oil prices are likely to climb back to RM3,200 a tonne by year-end, said Jupiter Securities chief market strategist Benny Lee Wan Yu.

Yesterday, the third-month benchmark palm oil futures on the Malaysian Derivatives Exchange traded RM10 higher to close at RM2,937 a tonne.

"Palm oil prices are more or less going to trade rangebound between RM2,900 and RM3,000 a tonne in the immediate weeks. 

"Chartwise, palm oil prices seemed to have bottomed out at RM2,820 a tonne," he said.

"So far, palm oil is one of the commodities that has not moved up. Gold, petroleum and soyabean have all gone up. 

Currently, the trading pattern is very much like that in 2010. Back then, prices went as high as RM3,900 a tonne towards the end of the year," he said.

However, Lee said this time, prices are not likely to trade as high because of high inventories. 

"We see the prices reversing into an uptrend, going as high as RM3,200 by year end and peaking at RM3,400 a tonne in the first quarter of 2013," he added.

Lee was speaking on the sidelines of the International Palm Oil Sustainability Conference 2012 held here yesterday. 

Also present at the conference was Malaysian Palm Oil Council chairman Datuk Lee Yeow Chor.

Cargo surveyor Intertek Agri Services put September 1 to September 10 exports at 453,302 tonnes, an increase of 27 per cent. Another surveyor, SGS, puts exports at 460,939 tonnes, up 30 per cent. 

In the first 10 days of this month, crude palm oil exports jumped more than twofolds to 167,663 tonnes. The surveyors' report said the surge is a result of the government's recent decision to allow another two million tonnes of tax-free crude palm oil to be exported. 

Lee concurred with the cargo surveyors' findings that palm oil export volume is doing well. 

"We expect shipment to pick up in the coming months. There's strong demand for palm oil from India and Africa," he said.

When asked on price outlook, Lee replied: "Palm oil is still trading at a wide discount to soya oil of more than US$200 (RM620) a tonne. This price differential has prompted demand for more palm oil and in time, prices should start to rise again."

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