CPO to see mild price recovery this year
Cheah Chor Sooi | 25 Jan 2019 00:30
Having performed dismally last year, the crude palm oil (CPO) price is poised to pick up in 2019 albeit with limited upside.
Despite enduring a difficult ride in 2018 with the CPO price falling more than 18% to end the year at RM1,952/tonne, Public Investment Bank Research analyst Chong Hoe Leong is projecting a full-year average price of RM2,200 in 2019.
This is on the back of an anticipated gradual decline in inventories from an all-time high of 3.21 million tonnes as of end-2018 to around 2.7 million tonnes by March this year.
“Inventory in December 2018 saw an increase of 6.9% month-on-month to 3.21 million tonnes, topping the market expectation of 3.14 million tonnes,” he says in a plantation sector update dated Jan 11.
“Nevertheless, we see easing pressure on the high inventory levels beginning this month ( January 2019) on the back of:
• favourable Indian import duty policy,
• low production cycle period and
• aggressive re-stocking activities after the Chinese New Year celebration.”
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