Malaysian analysts expect lower crude palm oil prices in 2023

Malaysian analysts on Wednesday foresaw crude palm oil (CPO) prices to trend lower in 2023 on increased supply and slow demand.

However, for the full year of 2023, it anticipated CPO prices to potentially be lower year on year, given the expectation of global production. Production of the eight major vegetable oils would increase further in the 2023 season.

Also, it said the looming global recession could potentially curb consumption in many markets.

According to the research house, there are many uncertainties and price-determining factors to watch out for, which include the global harvest progress and actual yields achieved for all major edible oils.

And quantum of purchases from major importing countries, uncertainty over the export corridor for Ukrainian products, biodiesel production, weather developments, Malaysian and Indonesian production and stock movements.

“We are keeping our CPO average selling price assumptions of 3,100 ringgits (709 dollars) to 3,200 ringgits (732 dollars) per ton for 2023,’’ it said.

Meanwhile, Hong Leong Investment Bank Research said in a note that it maintained the 2023-2024 CPO price assumptions of 4,000 ringgits ($914) per ton to 3,800 ringgits ($869) per tonne.

“We believe CPO price will sustain at above 4,000 ringgits ($914) per ton over the next few months, possibly until the first quarter, and start trending down from the second quarter onwards,’’ said the research house.

It said the CPP stockpile would likely remain on a downtrend in the next few months on the back of a seasonally low production cycle.

CGS CIMB, on the other hand, said in a note that it expects CPO prices to average 3,800 ringgits ($869) per ton in 2023. It predicted that the workers’ shortage issue would ease in mid-2023, boosting palm oil production.

However, it added that production costs might stay high due to the full-year impact of minimum wage and higher fertiliser costs.

CGS CIMB expects CPO prices to soften from the second quarter onwards this year as palm oil output recovers with the entry of more foreign workers, while slower global growth could curb demand.

According to CGS CIMB, Malaysia’s total palm oil output grew two per cent to 18.45 million tonnes in 2022.

The rising mature palm oil area more than offset lower CPO yields due to shortages of foreign workers.

Tags: demand, CGS-CIMB, Indonesia, prices, Crude palm oil, Production, Malaysia, markets, CPO