SANDAKAN: Malaysia’s crude palm oil (CPO) prices, at their lowest in five years, may have bottomed out and could rebound on better outlook due to the upcoming festivities and biodiesel uptake.
IJM Plantations Bhd chief executive officer and managing director Joseph Tek Choon Yee is optimistic about the coming months due to the Deepavali and Lunar New Year celebrations, as well as the replenishment of inventories in consumer countries.
”I’m looking at prices of around RM2,200 to RM2,300 a tonne in the near term and then an affirmative upward trending. In the end, the market will find its equilibrium,” he said, here, recently.
In a separate interview, TDM Bhd chief executive officer Badrul Hisham Mahari said: “I think we have seen the price bottoming out and I expect it to improve, with the average being above RM2,100 per tonne.
“The removal of export tax is an excellent decision.
There should not be any export tax, even if the argument is to protect downstream players. I hope that it will be removed permanently.”
What can stakeholders do to shore up low prices?
Tek said for now, the drive for pragmatic replanting, high productivity and cost effectiveness must continue amid the currentmargin compression.
He said the government’s supportive measures like the export duty exemption on CPO for September and October (which will possibly be extended) are anticipated to have a temporary positive impact on exports.
“Above all, it will be constructive if there are continued efforts to establish a platform for Malaysia and Indonesia to discover commonalities, and work together for the mutual benefit of the palm oil industry”.
Tek said CPO prices had tumbled to five-year lows due to a confluence of factors.
These included bumper soya bean crop in the United States, which has contributed to narrowing price differences between soya bean oil and CPO and other edible oils, missed expectation on the implementation of biodiesel in both Indonesia and Malaysia and weather forecasters having dialled back their expectations on El Nino occurrence.
There is also possibly profit-booking by speculators in the market.
In short, global edible oil supplies are rising and that has a bearish influence on palm oil.