InfoSAWIT, KUALA LUMPUR – BMI of Fitch Group revised crude palm oil (CPO) contract price in 2024. It escalated to be RM 3.850 per ton from the previous that was RM 3.750 per ton. It reflected the increasing price up to 2,67%.
The revision also reflected that the decreasing price in the second semester of 2024 was not fully realized. BMI also predicted CPO price would get pressure to be cheaper until 2024 with the average at RM 3.700 per ton by the late of 2024.
In the report released on last Tuesday, BMI claimed that the over - supply, competition with alternative vegetable oil and the unstable imports could be the burdens for palm oil trade until the late of 2024 and in 2025. It was predicted that there would be La Nina in the fourth quarter of 2024, the implementation of European Union Deforestation Regulation by the early of 2025. These would multiply the pressure in many countries.
Even though CPO would get cheaper to be RM3.952 per ton in August 2024 from RM 3.973 per ton in May, BMI predicted, CPO would be relatively stable but cheaper in 2025. As the result, CPO price in 2025 was revised to get more expensive, to be RM 3.650 per ton from RM 3.500 per ton.
CPO price got escalated 0,70% in 2024 until 9 August even though many countries significantly got volatility by the early of August. The cheaper CPO that reached 3,32% on 5 August and 2,17% on 6 August reflected the pressures from many factors, such as, the better Malaysian ringgit, the selling action in many countries, and the cheaper crude oil.
As InfoSAWIT quoted from The Edge Malaysia, BMI claimed CPO trade would be more stable in the midst of August with the accumulation loss to be 4,12% on 11 August. But the sentiment of markets could be fragile because Malaysian ringgit would be more expensive and be the burden in CPO stock markets.
On the other hand, soyoil trade would be the challenge for CPO. It significantly got cheaper and hit the lowest level since August 2020 while the supply got increased and the competition in South America would weaken the market sentiment.
In the increasing risks, BMI mentioned the decreasing palm oil stocks in Malaysia in July, and the postponed impact potential from El Nino in 2023-2024 to Indonesia’s production. Palm oil stocks in Malaysia got decreased to be 1,73 million tons in July from 1,83 million tons in June even though the production and export remained good.
In a whole, BMI predicted CPO would be getting pressure with some increasing risks about geopolitics and weather condition. But EUDR and close competition with many alternative vegetable oil would also press the markets until 2025. (T2)
