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enning22
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Posted by enning22 > 2017-11-04 00:24 | Report Abuse
Palm prices could rise to RM2,950/T in January if Brent oil gains: Fry
Reuters
November 03, 2017 16:00 pm MYT
NUSA DUA, Indonesia (Nov 3): Malaysian crude palm oil (CPO) prices could rise to a high of RM2,950 (US$697) per tonne in January before falling to RM2,600 if oil prices rise until the second quarter of the year, leading analyst James Fry forecast on Friday.
Fry, the chairman of commodities consultancy LMC International, had last forecast in September for Malaysian benchmark prices to fall below RM2,400 per tonne in November and December, as overseas appetite for the commodity falters over the winter period.
"Brent is pulled between Saudi Arabia's desire to raise values before the huge Aramco IPO and US shale oil's response to higher prices," he said, referring to the initial public offering of Saudi Aramco, Saudi Arabia's state-owned oil company.
"If you think the Saudi's will hold sway, at least until 2Q, CPO futures peak at RM2,950 in January and then fall back towards RM2,600," he said at an industry conference in Bali, Indonesia.
With Brent prices at US$60 a barrel, Fry estimates palm oil peaking at over RM2,800 per tonne in January, before falling below RM2,500.
Prices of the tropical oil would drop towards RM2,300 per tonne with oil prices at US$55 a barrel, he added.
Benchmark Bursa Malaysia crude palm oil futures climbed to their highest since Sept. 15 earlier this week, but is down about 9% so far this year.
It was last down 0.6% on Friday evening at RM2,804 a tonne.
Brent crude oil prices rose as high as US$61.70 a barrel on Wednesday, its highest intraday level since July 2015, and was last up 0.2% at US$60.71 a barrel.
Palm oil prices are expected to climb as production growth this year has not come in as much as expected due to the lingering effects of the El Nino.
The El Nino weather pattern in 2015 curtailed palm oil production in Southeast Asia as it brought hot, dry weather to the region that limited palm fruit yields.
Fry later said on the sidelines of the conference that Malaysia's palm oil production could reach nearly 21 million tonnes in 2018.
Indonesian output this year is forecast at nearly 36 million tonnes, said Fry, and could see additional growth of 4 million tonnes in 2018.
"For Indonesia we have an increase of another 4 million tonnes or so from 2017. The recovery is continuing, and a lot of the area planted is maturing, so you add all these things," he said.
Indonesia and Malaysia produce nearly 90% of global palm oil supplies.
(US$1 = RM4.2310)