KUALA LUMPUR, Feb 11 — MIDF Research has maintained its ‘positive’ rating on the plantation sector, with a crude palm oil (CPO) target price of RM3,300 per tonne for 2022. 

In its research note, it believed that the tight palm oil supply situation would likely ease in second half (2H) of 2022 due to higher production. 

“In the intermediate term, we expect Malaysia’s palm oil stockpiles to remain on a downtrend, mainly due to the seasonally lower production cycle of palm oil," said the research firm.

Export demand is expected to improve, backed by upbeat restocking activities from key destinations and higher demand from Middle East countries following the Malaysian Palm Oil Council's ‘Malaysian Palm Oil Full of Goodness’ global consumer campaign, it said.

Despite the easing concerns, the research firm is not expecting a drastic decline in CPO price next year and anticipate that CPO price would remain favourable in CY22. 

"On another note, we opine that the current high price of CPO will normalise going forward, but at a slow pace, given the resumption of economic activities globally," said MIDF Research. 

Meanwhile, Maybank IBG Research also maintained its 'positive' call on the plantation sector, and expects February's exports figures to be encouraging despite the current record palm oil prices and lesser working days during the month following the long Chinese New Year holiday. 

Its view was based on upside risks such as weaker-than-expected production recovery of palm oil and other vegetable oils in 2022, higher Brent crude oil price and weather anomalies at major palm oil and oilseeds producing regions. 

However, it noted that the labour shortage is worsening by the day, especially in Peninsular Malaysia and Sarawak, and  that the foreign workers rehiring dateline has been pushed back by several months. 

“These factors have been lending good support to CPO prices in recent weeks," it said in its research note. 

The research house noted that downside risks to its call include the reversal of Brent crude oil prices to below US$80 per barrel, negative policies by importing countries, unfriendly policies at producing or exporting countries, weaker competing oil prices like soya bean and rapeseed, weaker global demand and stronger-than-expected production in 2022. 

Meanwhile, CGS-CIMB has placed a ‘neutral’ rating on the sector, and is keeping its 2023-2024 CPO forecasts unchanged at RM3,240 per tonne.

However, it had raised its Malaysian CPO price forecast for 2022 by 14 per cent to RM4,100 per tonne from RM3,600 per tonne previously. 

"The upgrade in our CPO price is to reflect slower-than-expected supply response due to the delay in resolving the foreign worker shortage issues in Malaysia, the drought in South America and tighter-than-expected global palm oil supply due to Indonesia’s new export ruling," it said.  — AFP

https://www.malaymail.com/news/money/2022/02/11/research-firms-mostly-positive-on-plantation-sector/2040931