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KUALA LUMPUR, Oct 27 — The crude palm oil (CPO) futures are likely to stay supported at RM2,800-RM2,900 per tonne and can go back to the RM3,000 level if production is lower in October and November, according to Singapore-based Palm Oil Analytics’ owner and co-founder, Sathia Varqa.
He said high production in Malaysia had already happened in the early part of this year; hence lower production numbers were expected for the rest of the year.
“If production in November is lower than October and December is lower than November, then there is a chance for the price to shoot up to RM3,000,” he said at the virtual Palm and Lauric Oils Price Outlook Conference & Exhibition 2020 today.
Based on his presentation on the Malaysia palm oil market 2020, overall production is expected to decline by 1.8 per cent to 19.5 million tonnes in 2020, while year-end stockpile is projected to drop by 0.5 per cent to 2.0 million tonnes.
Meanwhile, exports are set to fall by 8.0 per cent to 17 million tonnes following a sharp decline in shipments to India in the early part of the year.
For 2021, he said, CPO futures would ease slightly to RM2,650-RM2,800 in the first quarter amid improved production.
For the first nine months of this year, production declined 4.0 per cent and domestic consumption was down 1.5 per cent year-on-year.
Meanwhile, exports dropped nine per cent due to lower shipments to India following Covid-19 restrictions.
Sathia said among key developments that would influence the CPO market’s performance were developments on Covid-19, palm and US soybean production, Malaysia’s biodiesel clarity and zero export tax updates as well as the US-China trade war.
Under the National Economic Recovery Plan (Penjana), the government has waived the export duty for CPO, crude palm kernel oil, and refined, bleached and deodorised palm kernel oil from July 1 to December 31, 2020. — Bernama