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<\/p>\nKUALA LUMPUR \u2013 Palm oil industry players\u00a0raised their concerns\u00a0over the limited supply growth from both Indonesia and Malaysia, which\u00a0could drive the crude palm oil (CPO) prices higher moving forward, said Public Investment Bank Bhd.<\/p>\n
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The research house said in a note on Thursday (07\/03\/2024) that\u00a0during\u00a0the Palm and Lauric Oils Conference 2024 (POC2024) recently, the majority of the speakers opined that\u00a0the CPO price would break above the RM4,000 per ton level in the near term.<\/p>\n
\u201cMost industry experts have a bullish view on the CPO price in 2024 but\u00a0mostly\u00a0think that it will trade lower in the second half of 2024 (2H2024), while two notable palm oil experts have a bullish view on the CPO prices, citing the limited palm oil\u00a0supply growth in the top two producing countries.<\/p>\n
\u201cHowever, their concerns are in contrast with the local planters, who have mostly guided a double-digit production growth for this year,\u201d it said.<\/p>\n
Meanwhile, Public Investment Bank said the key focus at POC2024\u00a0is on the looming European Union Deforestation Regulation (EUDR), which will affect\u00a0global commodity demand.<\/p>\n
On EUDR, it said\u00a0the new law in EUDR has included seven\u00a0commodities within the scope of the EU regulation, namely soybean, beef, palm oil, wood, cocoa, coffee and rubber.<\/p>\n
\u201cProducts of the commodities included in the regulation may only be placed or exported in or from the EU market if they can prove they are deforestation-free,\u00a0produced in accordance with the relevant legislation of the country of production and covered by a due diligence statement.<\/p>\n
\u201cWe think production from the smallholder plantation may have difficulty to be absorbed by the palm oil producers given the poor traceability and lack of transparency and their fresh fruit brunches (FFB) production might be absorbed at a discounted price to be sold to other regions,\u201d it said.<\/p>\n
The research house added\u00a0the possibility of La Nina in 2H 2024, changes of domestic market obligation and biodiesel mandate in Indonesia and weather abnormalities in North America which could pose\u00a0a threat to soybean supply will be the major wildcards towards CPO prices.<\/p>\n
Hence, Public Investment Bank has forecast\u00a0CPO price to average at RM3,800 per ton, closest to\u00a0Palm Oil Analytics (Fastmarkets)\u00a0managing director Dr Sathia Varqa\u2019s forecast\u00a0of RM3,500-RM3,700 per ton and\u00a0chooses\u00a0Ta Ann Holdings Bhd as its top pick.\u00a0(*)<\/p>\n