Kenanga Research said palm oil supply should recover this year, with crude palm oil (CPO) prices likely to remain firm in 2023 and 2024.
PETALING JAYA: The demand for palm oil is expected to recover, underpinned by an increasing need within Asia-Pacific, better affordability and improving global biofuel policies.
Kenanga Research said in a report that recovery in the edible oil supply market has been subdued so far this year, with South America, particularly Argentina, reporting smaller-than-expected soybean surplus.
This muted inventory outlook is projected to extend into 2024. On the other hand, Brazil is expected to post a record soybean harvest.
“While Brazil is the top producer, Argentina is actually more important for international trade, often ranking as the third or fourth-largest edible oil exporter in the world after Indonesia, Malaysia and sometimes Russia.
“Fortunately for the edible oil supply market, palm oil supply should also improve,” Kenanga Research said.
The research house said palm oil supply should recover this year, with crude palm oil (CPO) prices likely to remain firm in 2023 and 2024.
This is with the exception should palm oil, soy oil and rapeseed oil harvests improve significantly in the latter part of this year.
“The higher palm oil production of 3% to 5% year-on-year in 2023 should ease oil supply, even if on a limited scale.
“We are keeping our 2023 estimates for CPO price at RM3,800 per tonne intact, but revising up our 2024 forecast CPO price from RM3,500 to RM3,800 per tonne,” it said.
