NST Business
KUALA LUMPUR: Fragile edible oil supply recovery for 2023 may now extend into 2024 on a subdued inventory outlook following smaller-than-expected soyabean surplus in South America, said Kenanga Research.
Fortunately, the firm said palm oil supply should recover this year with crude palm oil (CPO) prices likely to stay relatively firm over 2023 and into 2024.
This is unless palm, soy or rapeseed harvests prove exceptionally good later in 2023.
Kenanga Research is keeping its 2023 CPO price of RM3,800 per tonne intact but revising up 2024 CPO price from RM3,500 to RM3,800 per tonne.
"Our CPO price upgrade for 2024 is a positive but not enough to justify an upgrade," the firm said in a report today.
It said positive factors for the sector included palm oil being an essential food and fuel for markets in emerging economies such as China, India and Indonesia and players' asset-rich net tangible asset.
"We are keeping our Neutral weight intact in the absence of a strong upside catalyst."
Kenanga Research's sector picks are Kuala Lumpur Kepong Bhd (Outperform, target price: RM27.00) and PPB Group Bhd (OP, target price: RM19.30).