PETALING JAYA: Record levels of crude palm oil (CPO) stockpiles in October had little impact on CPO prices yesterday, with the benchmark January futures contracts closing at RM2,242 per tonne.

The Malaysian Palm Oil Board (MPOB) announced yesterday that October palm oil stocks spiked to a 10-month high of 1.974 million tonnes from a revised 1.579 million in September.

The three-month CPO futures closing price yesterday reflected a jump of 32% year-to-date, but was still down by 20% from the highest price recorded this year at RM2,789 per tonne in May.

OSK Research analyst Alvin Tai said the decline in CPO prices yesterday was relatively small compared with the double-digit rise in CPO stock.

“I think the market has anticipated the huge rise in CPO production and stock,” he told StarBiz.

Jim Teh, a palm oil trader at Interband Group, sees CPO prices ranging between RM2,000 and RM2,300 per tonne from now till year-end.

However, he cautioned that if CPO stockpiles crossed the two-million tonne level, there would be problems in storage capacity and that could affect prices.

Meanwhile, Rabobank, in its recent research report on agriculture commodity market, said palm oil prices were set for a downward correction in the coming months based on increasingly bearish fundamentals.

“We expected a further build up in palm oil stocks as production progresses through a seasonal upturn in Malaysia and Indonesia.

“Although palm oil price discount to soy oil price has started to widen again, providing an incentive for consumers to switch to palm oil, bearish signals such as the looming of potential record soybean crop from South America to come into the market in first quarter next year will add pressure to oilseed complex prices as a whole,” it said. Source : The Star by Sharidan M. Ali

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