PALMOILMAGAZINE, KUALA LUMPUR – In its recent report, OCBC Global Markets Research has adjusted its crude palm oil (CPO) price projection for 2024 to approximately RM 3,650 per ton. This marks a revision from the previous forecast of RM 3,400 per ton.
The alteration in projection is attributed to escalating supply risks associated with the anticipated occurrence of El Nino throughout 2024. Despite being expected to be minor, El Nino introduces uncertainty into the palm oil trade.
Both the Malaysian Palm Oil Board (MPOB) and the Indonesian Palm Oil Association (IPOA) are bracing for potential stagnation due to El Nino. Concurrently, Indonesia is set to increase its biofuel consumption, posing a significant challenge to palm oil exports.
Also Read: Malaysian Government 2024 CPO Price Forecast
IPOA predicts a four percent decrease in palm oil exports from Indonesia, amounting to 29 million tons this year. This decline is anticipated due to the rising domestic demand driven by the 35 percent biodiesel mandatory program (B35).
As quoted from Bernama, the smaller price disparity between palm oil and other vegetable oils might encourage to produce biofuel, solve the environmental worry. OCBC Research acknowledged that duration and intensity of El Nino would be unpredictable for the next few months but CPO price would be traded in certain numbers because of the close palm oil discount from other vegetable oils.
Besides, United States Department of Agriculture projected soyoil supply would be escalating about 2,9 million tons in 2023/2024, to be reaching 61,9 million tons. The projection also contributed to cheaper soyoil. OCBC Research predicted, Brent oil would be about US$ 80 per barrel in 2024, or cheaper from US$ 82 in 2023. The projection was the same with the economic progress and profitable supply prospect globally.
The cheaper Brent was from the little increasing development expectation in the globe but relatively stable. OCBC Research also declared the supply would be always enough to fulfill the 2024 demands. Though Organization of the Petroleum Exporting Countries (OPEC) and its allay would cut off the production that increase to be 3,9 million barrel per day (mbpd) in the first quarter of 2024 from 3,0 mbpd in December 2023, the higher oil supplies from USA, Brazil and Iran are hoped to support oil trade in the globe. (T2)
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