KUALA LUMPUR, May 11 (Xinhua) -- Analysts have maintained their cautious views on crude palm oil (CPO) prices despite Malaysia's April stockpile hitting a 13-month low.
Maybank Investment Bank said in a note on Thursday that despite a tight April palm oil stockpile at 1.5 million tonnes, the market seems unimpressed.
"This is, in part, due to the fact that CPO price has lost its competitiveness vis-a-vis other major competing oils," it said.
According to the research house, competing oil prices have come under substantial pressure since the start of the year, and the discount of CPO prices suggests that the market is anticipating supply recovery in the coming months.
Maybank said the market remained cautious of CPO prices on uncertain macroeconomic outlook, and improving production prospects as palm oil output is anticipated to make its seasonal recovery.
It said the market is also concerned over a slowdown in demand for palm oil post-Ramadhan and as CPO price is no longer competitive.
The research house maintained its cautious view that CPO spot price will continue to stay volatile in the near term while trending lower by midyear on supply recovery.
Its full-year CPO price forecast stood at 3,400 ringgit (763 U.S. dollars) per tonne.
Affin Hwang Investment Bank said in a note on Thursday that for the 2023 season, it still expects the rising supply of vegetable oils in the market to potentially put pressure on prices.
Also, it believes the looming global recession could potentially curb consumption in many markets, but this may be partially mitigated by rising demand from the biodiesel industry and El Nino sentiment for the second half.
"Overall, there are many uncertainties and price determinants to watch out for. We made no changes to our CPO average selling price (ASP) assumption of 3,100 ringgit-3,200 ringgit per tonne for 2023," it said.
According to the research house, CPO prices weakened in the final week of April but remained comparatively firm as compared to other vegetable oils. This was partly due to Indonesia's restriction on exports.
Affin believes the move to tighten the domestic market obligation (DMO) export ratio will tighten Indonesia's exports in the near term, but depending on how fast the previously suspended export permits are released, which will add to export supply.
It said the net impact on prices in the short term may be limited given the current slow demand and falling prices of competing for vegetable oils globally. ■