CPO prices will range from 3,700 to 3,950 ringgit with seasonal production recovery – MPOC

Crude palm oil (CPO) prices are expected to range between 3,700 and 3,950 ringgit this month as a seasonal recovery in production will drive prices lower, according to the Malaysian Palm Oil Council (MPOC).

However, despite the increase in production, MPOC forecasts palm oil stocks to remain below two million tons in the second quarter of this year. This could be offset by continued export demand, especially from India and China, where edible oil stocks are dwindling.

“The expected increase in supply has already impacted prices, with the recent fall in palm oil prices dropping 9% in April, reversing the increase from March,” MPOC said in a statement.

“In the European market, palm oil prices fell by 5.5% in April and soybean oil prices fell by 2.5%. Sunflower and rapeseed oil prices, however, rose 3.7% and 8.7% respectively. The shift is expected to encourage key importing countries to favor palm oil over soft oils,” it added.

The CPO contract for the third month hit a high of 4,336 ringgit per tonne on April 3, up more than 18 percent from 3,650 ringgit per tonne at the end of December, according to data compiled by Bloomberg.

At the time of writing on Monday, the CPO contract for the third month was trading at 3,898 ringgit per tonne.

Meanwhile, soybean, rapeseed and sunflower seed production is expected to rise by 26 million tons, while processing (crushing) capacity is expected to increase by 16 million tons, MPOC said.

“Despite the prevailing bearish sentiment in the soft oil market, rapeseed and sunflower oils have achieved a price premium over palm oil. Therefore, demand is expected to return to palm oil, especially in key markets such as India and China,” the report said.

Tags: prices, Malaysia, palm oil