PALMOILMAGAZINE, KUALA LUMPUR – BMI, part of the Fitch Group, has revised its forecast for crude palm oil (CPO) contract prices in 2024, raising it to RM 3,850 per ton from the previous estimate of RM 3,750 per ton, reflecting a 2.67% increase. This adjustment suggests that the anticipated price drop in the second half of 2024 has not fully materialized.
BMI also projects that CPO prices will face downward pressure through the end of 2024, with an average price of RM 3,700 per ton by year’s end. In a report released last Tuesday, BMI cited factors such as oversupply, competition with alternative vegetable oils, and volatile imports as challenges for the palm oil trade through late 2024 and into 2025.
Additionally, the potential impact of La Niña in Q4 2024 and the implementation of the European Union’s Deforestation Regulation in early 2025 are expected to increase pressures in various markets.
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Despite the decline in CPO prices to RM 3,952 per ton in August 2024 from RM 3,973 per ton in May, BMI anticipates that while prices will remain relatively stable, they will be lower in 2025. As a result, the 2025 CPO price forecast has been revised upward to RM 3,650 per ton from RM 3,500 per ton.
CPO price got escalated 0,70% in 2024 until 9 August even though many countries significantly got volatility by the early of August. The cheaper CPO that reached 3,32% on 5 August and 2,17% on 6 August reflected the pressures from many factors, such as, the better Malaysian ringgit, the selling action in many countries, and the cheaper crude oil.
As Palmoilmagazine.com quoted from The Edge Malaysia, BMI claimed CPO trade would be more stable in the midst of August with the accumulation loss to be 4,12% on 11 August. But the sentiment of markets could be fragile because Malaysian ringgit would be more expensive and be the burden in CPO stock markets.
On the other hand, soyoil trade would be the challenge for CPO. It significantly got cheaper and hit the lowest level since August 2020 while the supply got increased and the competition in South America would weaken the market sentiment.
In the increasing risks, BMI mentioned the decreasing palm oil stocks in Malaysia in July, and the postponed impact potential from El Nino in 2023-2024 to Indonesia’s production. Palm oil stocks in Malaysia got decreased to be 1,73 million tons in July from 1,83 million tons in June even though the production and export remained good.
In a whole, BMI predicted CPO would be getting pressure with some increasing risks about geopolitics and weather condition. But EUDR and close competition with many alternative vegetable oil would also press the markets until 2025. (P2)
