KUALA LUMPUR: Malaysia crude palm oil (CPO) production fell 8.16% month-on-month in December as rainy weather disrupted fresh fruit bunch (FFB) production.
Data from the Malaysian Palm Oil Board (MPOB) released yesterday showed CPO output of 1.49 million tonnes in December compared with 1.62 million tones in November last year.
An analyst with HwangDBS Vickers Research said CPO production for January should continue to be lower due to weather conditions.
“A lot of activity has been disrupted by the rain. Although we did not see heavy flooding in Malaysia, the rainfall was still pretty heavy. That’s why CPO prices have found relatively strong support,” said the analyst.
However, the plantation analyst expects CPO prices should start to ease towards the second half of the year premised on the expected rising supply in Malaysia.
“Overall, the impact of the eurozone crisis on CPO demand and prices remains to be seen but we don’t expect a sharp fall in CPO prices,” said the analyst.
Yesterday’s MPOB data also showed that CPO inventory fell 13.36% to 1.06 million tonnes in December from a stock of 1.22 million tones in November. Palm oil exports contracted 4.49% to 1.58 million tones in December from 1.66 million tonnes a month earlier.
In a note on Jan 6, Maybank IB Research said it foresees CPO average selling price weakening 20% in 2012 to RM2,600 per tonne, pegging it to the recent historical five-year average.
“Another global recession may see CPO price re-testing RM2,000 per tonne,” the research house said.
Maybank IB Research noted that during the global financial crisis in 2008, CPO prices fell 67% within eight months from a high of RM4,203 per tonne to a low of RM1,404 per tonne.
Malaysian palm oil futures for February 2012 delivery rose by a modest RM8 to RM3,228 a tonne yesterday, extending a four-day uptrend over last week.
This article appeared in The Edge Financial Daily, January 11, 2012.
Data from the Malaysian Palm Oil Board (MPOB) released yesterday showed CPO output of 1.49 million tonnes in December compared with 1.62 million tones in November last year.
An analyst with HwangDBS Vickers Research said CPO production for January should continue to be lower due to weather conditions.
“A lot of activity has been disrupted by the rain. Although we did not see heavy flooding in Malaysia, the rainfall was still pretty heavy. That’s why CPO prices have found relatively strong support,” said the analyst.
However, the plantation analyst expects CPO prices should start to ease towards the second half of the year premised on the expected rising supply in Malaysia.
“Overall, the impact of the eurozone crisis on CPO demand and prices remains to be seen but we don’t expect a sharp fall in CPO prices,” said the analyst.
Yesterday’s MPOB data also showed that CPO inventory fell 13.36% to 1.06 million tonnes in December from a stock of 1.22 million tones in November. Palm oil exports contracted 4.49% to 1.58 million tones in December from 1.66 million tonnes a month earlier.
In a note on Jan 6, Maybank IB Research said it foresees CPO average selling price weakening 20% in 2012 to RM2,600 per tonne, pegging it to the recent historical five-year average.
“Another global recession may see CPO price re-testing RM2,000 per tonne,” the research house said.
Maybank IB Research noted that during the global financial crisis in 2008, CPO prices fell 67% within eight months from a high of RM4,203 per tonne to a low of RM1,404 per tonne.
Malaysian palm oil futures for February 2012 delivery rose by a modest RM8 to RM3,228 a tonne yesterday, extending a four-day uptrend over last week.
This article appeared in The Edge Financial Daily, January 11, 2012.
