Crude palm oil (CPO) prices, which have plummeted since the - TopicsExpress

Crude palm oil (CPO) prices, which have plummeted since the beginning of the year, are expected to pick up in the next 12 months to a price range of RM2,600 to RM2,700 per tonne, say analysts. MIDF Amanah Investment’s plantation analyst Nadia Kamil expects prices to recover within the next six to 12 months as demand recovers. “The demand is expected to recover with the support of higher off-take from India and improvement in B7 bio-diesel programme implemented in November 2014. “However, we believe the increase in demand will be marginal and it is insufficient to push CPO beyond RM3,000 per tonne. Hence, we maintain our average CPO price forecast for 2015 as RM2,650 per tonne,” said Nadia. However, in the short to medium term of the next three to six months, Nadia said demand is expected to shrink as major buyers from China and India are expected to reduce their palm oil consumption due to the winter season. “Palm oil tends to solidify in cold temperature. Given this background, we do not foresee any significant changes in CPO price movement. We expect CPO price to move between RM2,200 and RM2,500 per tonne during that timeframe,” said Nadia. For the next six to 12 months, palm oil supplies from Indonesia and Malaysia are expected to grow at a rate of 6% to 8% from 7% in the corresponding period this year. Meanwhile, RHB Investment Bank Bhd’s plantation analyst Hoe Lee Leng said the pickup in prices is expected to happen in the first-quarter (1Q) of next year, with CPO prices expected to reach a range of RM2,600 to RM2,700 per tonne. “Prices will pick up in the 1Q of next year as there would be a better implementation of the bio-diesel programme in Indonesia. “Previously, prior to the election in Indonesia, there were many tenders that were not going through. Now with the government policies, the bio-diesel programme will be implemented based on that mandate,” said Hoe. Hoe, however, expects demand to slow down by the second-half of next year as production cycles increase during that timeframe.