Palm oil may average 7.1 per cent higher in 2010 than previously
forecast, driven by supply shortages and dry weather caused by El Nino,
BNP Paribas SA said.
The commodity may average RM2,625 a metric ton this year, compared
with an earlier forecast of RM2,450 a ton, the bank’s Michael Greenall
and Helmy Kristanto said today in a report. Prices may reach RM2,800 a
ton in the first half, BNP said.
An El Nino weather pattern, which can cause drought in parts of the
Asia-Pacific region and Australia, started in May and will be a
“significant occurrence,” BNP said. Royal Bank of Scotland Asia
Securities (Singapore) Pte Ltd also raised its palm oil forecast this
week.
“We believe the current tightness in crude palm oil supply will
keep prices firm and, if El Nino develops into a stronger event, crude
palm oil and other oilseed price strength would extend into second half
2010,” the BNP report said. The bank expects the strongest prices in
the first half of this year.
Still, BNP lowered its forecast for 2011 by 2 per cent to RM2,500 a ton, and predicted an average RM2,450 a ton in 2012.
Palm oil for April delivery climbed as much as 0.9 per cent today
on the Malaysia Derivatives Exchange and traded 0.6 higher at RM2,444 a
ton at the 12.30 pm local time trading break. Palm oil has gained 37
per cent in the past year and averaged RM2,230.96 in 2009. – Bloomberg
Source : Business Times
