PETALING JAYA: The price of crude palm oil (CPO) for May delivery
traded on the Bursa Malaysia Derivatives Exchange rose to the highest
since the beginning of the year yesterday as traders bet on rising
demand from the emerging markets and uncertain weather conditions.
CPO
gained 1.32% or RM35 to settle at RM2,685 per tonne yesterday after
experts at the first day of the Palm and Laurics Oil Conference said
CPO prices could reach as high as RM3,300 per tonne.
However, they were neutral to bearish over average prices for the year as the market was nearing the high for the current cycle.
The
May contract also rose to an intra-day high of RM2,689 in morning trade
after independent cargo surveyor Intertek released data showing that
palm oil exports climbed 25% in the first 10 days of March to 464,889
tonnes compared with the same period in February.
Oil World Ltd
executive director Thomas Mielke said CPO prices would fluctuate
between RM2,400 and RM2,900 per tonne with an average RM2,550 as the
market rally was nearing the end of the current cycle.
“The
current price at US$850 per tonne is reflecting the fundamentals,” he
told reporters on the second day of the conference. Mielke added that
CPO prices were also under pressure from a huge soybean crop overhang.
However,
Mielke said the moderate El Nino drought might extend to June and could
affect production and yield and push prices higher.
“If the
weather is dry here (Malaysia) for another two to four weeks, then
production and yield will be affected with expected gap around 200,000
to 400,000 tonnes per month from the usual production output,” he said,
adding that if that was the case, then estimates would be revised.
Mielke
said the impact of El Nino on local crops would be cushioned by
expansion in higher-yielding matured areas, boosting the country’s
output to 17.8 million tonnes this year from 17.6 million tonnes last
year.
Meanwhile, LMC International Ltd chairman James Fry
predicted a rather bearish outlook for CPO average price this year at
RM2,4OO to RM2,600 due to an expected fall in crude oil prices
triggered by a possible double-dip recession.
According to data
released by the Malaysia Palm Oil Board at midday yesterday, palm oil
stockpiles fell 10.87% to 1.78 million tonnes in February compared with
the previous month, output dropped 12.44% to 1.15 million tonnes and
exports declined 11.61% to 1.29 million tonnes.
OSK Research Sdn Bhd analyst Alvin Tai told StarBiz that demand from China and India would continue to be a very important factor in CPO prices.
“Weather is also important but its impact is not as lasting a factor,” he added.
Source : The Star
