Palm oil stocks to decline further this month on weather concerns

 Palm oil stock levels are projected to decline further this month, driven by seasonally weaker winter exports and reduced price competitiveness against alternative oils.

Nonetheless, Hong Leong Investment Bank Bhd (HLIB Research) noted that this decline may be tempered by lower cropping patterns and the effects of wet weather conditions.

The investment bank noted that palm oil stockpiles remained on a downtrend, falling by 6.9 per cent month-on-month (MoM) to 1.71 million tonnes in December 2024, as lower exports and higher imports were more than offset by seasonal declines in production.

“Palm oil exports declined for the second consecutive month, by 10.0 per cent to 1.34 million tonnes in December 2024, and we believe this was due mainly to demand rationing (particularly from price sensitive countries),” it said.

This also includes palm’s weak price competitiveness against other competing oils, and seasonality, as palm oil demand typically weakens during winter seasons.

“We maintain our 2025 to 2026 CPO price assumptions of RM4,000 per metric tonne (/mt) and RM3,800/mt, with the view that CPO price will remain at elevated levels in the near term, possibly until the first quarter of 2025, supported by weak near-term output,” HLIB Research said.

The plantation sector currently has two neutral’ ratings from HLIB Research and Public Investment Bank Bhd (PublicInvest).

Tags: CPO, demand, stock, exports, price, palm oil