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Analysts hope for better crude palm oil prices

Analysts hope for better crude palm oil prices

Analysts have foreseen better crude palm oil (CPO) prices this year, as El Nino weather is expected to affect palm oil supply.

According to Hellenic Shipping Report, RHB Investment Bank, the largest investment bank by asset size in Malaysia, said in its recent report that it expects CPO prices to trade higher – crossing the 4,000 ringgit ($872) per ton mark – as supply should be somewhat affected by El Nino as well as the impact of lower fertilisation activities between 2021 and 2022.

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UOBKayHian, one of Asia’s largest brokerage firms headquartered in Singapore, also expects CPO prices to trade higher in 2024 with an average price of 4,200 ringgit per ton, following the average of 3,850 ringgit per ton recorded year to date in 2023.

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The higher price expectation is also underpinned by potentially lower palm oil production, a challenging outlook for global vegetable oil supply and higher palm oil demand.

Affin Hwang Investment Bank, one of Malaysia’s leading bank-backed investment banking groups, also expects CPO prices to trend higher in 2024, attributable to the El Nino phenomenon that is expected to have an impact on the global supply of edible oils and their prices.

The research house’s CPO price assumption for 2024 is 4,200 ringgit to 4,400 ringgit per ton.

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Affin Hwang also expects Malaysia’s plantation sector earnings to jump 24 per cent year-on-year in 2024 from a low base in 2023 due mainly to higher CPO price expectations while Malaysia production could be flattish year-on-year. (1 ringgit equals $0.22).

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