June 4, 2014
MIDF remains positive on CPO prices
PETALING JAYA: MIDF Research released a report on Wednesday maintaining a positive call for crude palm oil (CPO) prices at an average RM2,700 per tonne this year despite recent price weakness.
CPO price for August delivery fell to RM2,395 per tonne yesterday on lower market sentiments after local inventories likely breached 2 million tonnes by year-end. CPO third-month futures reached a high of RM2,901 per tonne on March 10 but fell nearly 18% to RM2,387 on June 3.
The research house said the chances of El Nino developing this year “is at least 70%” and could very possibly be established by this August based on an update by the Australian Bureau of Meteorology.
It said for El Nino to develop this year, any three of four criteria have to be satisfied: sea-surface temperature, winds, Southern Oscillation Index and change in climate conditions.
MIDF Research expects a rebound in the second-half of the year underpinned by an increase in purchases from India, China and Pakistan due to the upcoming festive season, the current healthy local inventory level (at 1.77 million tonnes in April 2014) and impending El-Niño in second half of this year to exert upward pressure on CPO prices in anticipation of lower production in 2015.
Source: The Star