KUALA LUMPUR (Apr 1): Crude palm oil price (CPO) gains are expected to hinge mainly on stronger global sales of the commodity in the near term, according to TA Securities Holdings Bhd.

TA said in a note to clients today CPO prices could also take the cue from weather conditions and biodiesel policies.

“In the immediate term, we believe any potential upside to CPO price will largely emanate from stronger export demand. Weather anomaly and the biodiesel initiatives in Indonesia remains the key wild card ahead,” TA said.

TA is maintaining "neutral" call on the Malaysian plantation sector with CPO price assumptions of RM2,575 per tonne in 2015 and RM2,700 in 2016.

At 12:03pm, Bloomberg data showed that Malaysian CPO prices dropped RM3 to RM2,166 a tonne. This compared to a six-month intraday high of RM2,400 seen on March 4 this year.

TA's note was in response to the US Department of Agriculture's (USDA) soybean output forecast.

Quoting the USDA report, TA said US soybean production for 2014/15 could be revised upward to take into account the difference between the acreage estimates in the planting report versus the 83.7 million acres (33.48 million ha) projected in the March 2015 supply and demand report.

"Based on USDA’s existing estimate, soybeans production is expected to grow by 11.0% YoY in 2014/15 while demand will increase by 5.7% YoY. As a result, stocks are projected to expand by 35.0% YoY to 89.5mn tonnes.

“Overall, the report is neutral to slightly negative about vegetable oils prices. Both soybean oil and crude palm oil (CPO) prices had already corrected significantly to price-in the expansion of production in calendar year 2015,” the research house said in its note to clients today.

Prices of CPO and rival crop soybean tend to move in tandem because they are substitutes for each other.