Rabobank revises Q4 Malaysia crude palm oil price forecast higher to MR2,600/mt


Rabobank revised upwards its forecast of the Q4 2017 crude palm oil front-month futures price on Bursa Malaysia to MR2,600/mt or $618.09/mt in September, from an average of MR2,400/mt predicted in August, the company said in its commodity forecast note released Wednesday.

The rise in CPO front-month futures during August and September on the Bursa Malaysia exchange has forced several market analysts to revise their Q4 price projections higher.

The bank, however, maintained its bearish view on palm oil prices in Q4 2017 and 2018, as palm oil inventories in Malaysia and Indonesia continue to build up, while demand is projected to be limited.

Although Malaysia's August palm oil production was relatively flat month on month at 1.81 million mt, according to Malaysian Palm Oil Board data, CPO inventories increased by 8.9% over that period to 1.94 million mt due to lethargic exports, the note said. This represents the highest inventory level since March 2016.

Indonesian palm oil inventories were at 2.72 million mt in July, which is very high, it added.

Meanwhile, demand from India and China during Q4 was expected to be "tepid" post the Indian Deepavali festival, the note said. This was because domestic inventories in India and China were currently much higher than last year.

Indian palm oil port inventories stood at 490,000 mt at the end of August, while total edible oil port inventories were at 907,000 mt, added the note.

In China, domestic palm and soy oil inventories stood at 335,000 mt and 1.33 million mt at the beginning of September, the note said.

Rabobank expects domestic inventories in both China and India to remain high until the end of the year.


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