KUALA LUMPUR: BMI, a Fitch Solutions company, has revised upward its forecast for the average price of Bursa Malaysia-listed third-month crude palm oil (CPO) futures contracts in 2024 to RM3,850 per tonne from RM3,750 per tonne, reflecting a 2.7% increase.
However, it said CPO prices would face bearish headwinds into 2025 with the expected average price of RM3,700 a tonne up to end-2024, as the prices have not dropped throughout the second half of 2024 as projected.
“Throughout the remainder of 2024 and into 2025, we expect that ample supplies, competition from alternative edible oils, and unsure import demand will weigh on the palm oil market.
“The expected onset of the La Nina weather phenomenon in the fourth quarter of 2024 and the European Union’s Deforestation Regulation coming into force at the start of 2025 could also further compound pressures,” BMI said in a research note.
“In the near term, increased tensions in the Middle East, which could see fuel prices and biofuel feedstock demand increase, represent the major upsides to our outlook, BMI added.
Additionally, BMI forecast that the world palm oil production surplus would narrow from an estimated 1.9 million tonnes in 2023-2024 to 1.3 million tonnes in 2024-2025, which would mark a four-season low. — Bernama
