PETALING JAYA: Crude palm oil (CPO) futures for August and September contracts soared to close at RM2,440 and RM2,420 per tonne respectively yesterday, buoyed by positive palm oil export and stock figures for July. The benchmark CPO October contract closed RM60 higher at RM2,400 per tonne after the Malaysian Palm Oil Board (MPOB) reported that palm oil stocks in July eased 5.7% to 1.33 million tonnes for the first time since April, while exports rose 13% to 1.45 million tonnes. CPO production in July was 3.02% higher at 1.49 million tonnes from 1.45 million tonnes in June. However, analysts contacted by StarBiz were mixed on the future direction of CPO prices, with prices seen around RM2,300 to RM2,400 per tonne in the short term, but “it will never again hit RM4,000 per tonne seen in early 2008 due to the absence of biodiesel and trans fat issues amid higher crude oil prices,” they said. The current high edible oils stockpiles in China and India could put more pressure on CPO prices should exports to these two countries worsen in the coming months, they added. OSK Research analyst Alvin Tai said with palm oil production peaking in Malaysia and Indonesia’s output in the second half recovering, there could be ample supplies of palm oil going forward, which could mean CPO prices falling below RM2,000 per tonne on a sustained basis. A trader noted that independent cargo surveyor Intertek Testing Services had reported an almost 13% drop in palm oil exports for the first 10 days of this month after a strong export performance in June. But AmResearch is maintaining a positive stance on the sector, saying palm oil supplies are expected to remain soft while demand will continue to strengthen. Year to date, the country’s palm oil production totalled 9.4 million tonnes, 3.6% lower than the same period last year.
Industry players have indicated that CPO production is expected to peak in August or September this year, according to AmResearch in its latest report on the palm oil sector. Oil World has also forecast CPO output to remain flat at 17.7 million tonnes this year. On MPOB’s latest stats, AmResearch said: “In a nutshell, the decline in palm oil inventory in July is underpinned by moderate CPO production and healthy palm oil exports.” The research house noted that CPO production in the country had continued to grow at a slow pace, rising 3.2% month-on-month but down 4.5% year-on-year to 1.49 million tonnes in July. “We think the weaker-than-expected CPO output can be attributed to reduction in fertiliser application, biological tree stress, effects of floods early this year and impact from the Government’s replanting scheme which ended in June,” AmResearch said. Source : The Star by Hanim Adnan