CGS-CIMB: CPO prices to remain at RM3,500-RM4,000 per tonne in Sept

KUALA LUMPUR, Sept 6 — CGS-CIMB foresees crude palm (CPO) prices to remain firm between RM3,500 and RM4,000 per tonne this month.

In a note today, the research house maintained its average CPO price forecasts of RM3,700/RM2,900/ RM2800 per tonne for 2021/2022/2023, and reiterated its ‘neutral’ call on the sector.

“On average, CPO price rose 10 per cent month on month (m-o-m) and 62 per cent year on year (y-o-y) to RM4,555 per tonne in August 2021 due to tight edible oil supplies and adverse weather events in the United States, India and Canada, as well as labour shortage issues in Malaysia,” it said.

Findings from a survey of palm oil areas by the CGS-CIMB Futures team revealed that Malaysia’s CPO output was 1.67 million tonnes in August 2021.

CPO output was up 10 per cent up from July 2021 and down 10 per cent from the same month in 2020.

“Aug 21 output probably grew 9.7 per cent m-o-m, while export volume probably fell 16 per cent m-o-m.

“We think the sharp dip in exports in August may be temporary and could recover in September, ahead of the mooncake (Sept 21) and Diwali (Nov 4) festivals,” said CGS-CIMB.

Palm oil exports likely fell 16 per cent m-o-m, based on export statistics by cargo surveyors Intertek Testing Services (ITS) of -15.8 per cent m-o-m, Societe Generale de Surveillance (SGS) -17.8 per cent m-o-m and Amspec Malaysia -14.5 per cent m-o-m.

“We estimate that Malaysia’s palm oil inventory probably grew by 17.5 per cent m-o-m and 3.2 per cent y-o-y to 1.76 million tonnes as at end-Aug 2021.

“This projected rise in stock is sharper than historical trends of Malaysian palm oil stocks in August (+3 per cent m-o-m on average over the past 10 years),” it said.

However, it added that the projected palm oil stock level in Malaysia for August 2021 is 12 per cent below the 10-year historical August average of 2.0 million tonnes.

Official figures will be released on Friday, said the research house. — Bernama