Malaysian CPO prices near RM4,700 a tonne as commodities strengthen on recovery bets

Malaysian CPO prices near RM4,700 a tonne as commodities strengthen on recovery bets
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KUALA LUMPUR (May 6): Malaysian crude palm oil (CPO) prices climbed to a level near RM4,700 a tonne in morning trade on Bursa Malaysia today as prices of commodities including crude oil and copper strengthened on economic recovery bets despite lingering Covid-19 pandemic concerns.

On Bursa today, CPO prices for May 2021 had risen RM82 to RM4,680 a tonne at 10.57am, while CPO for June 2021 climbed RM91 to RM4,402.

Meanwhile, CPO prices for July 2021 were RM111 higher at RM4,155 a tonne.

CGS-CIMB Securities Sdn Bhd analysts Ivy Ng Lee Fang and Nagulan Ravi wrote in a note today that “rising prices of competing edible oils are supporting demand and will likely keep CPO prices firm in the near term”.

For April 2021, they said today average CPO prices had risen 4% month-on-month and 84% year-on-year to RM4,220 a tonne, a new monthly record high, driven by the sharp rise in competing edible oil prices. 

"We project CPO prices to remain firm at RM3,500-RM4,200/tonne in May 2021 amid low global edible oil inventories which will take time to rebuild. We maintain our view that palm oil supply will recover in 2Q21 (the second quarter of 2021) as weather conditions normalise. 

"We maintain our average CPO price forecasts of RM2,900/RM2,700 per tonne for 2021/2022 and reiterate our 'neutral' call on the sector,” they said.

Globally, it was reported that Asian shares rose today and commodity prices held near multi-year highs as investors switched to cyclicals amid hopes of a strong economic recovery, while the Australian dollar fell after China said it would end economic dialogue with Canberra.

It was reported that with very few US Federal Reserve (Fed) officials ready to discuss withdrawing stimulus and the world economy looking set to post a strong recovery from the pandemic-triggered recession, investors had switched to cyclicals, namely companies heavily affected by economic conditions, analysts said.

"This year, both the US and Chinese economy could grow 6% or more. If the world's two biggest economies are growing that much, clearly that's positive," Norihiro Fujito, the chief investment strategist of Mitsubishi UFJ Morgan Stanley Securities, was quoted by Reuters as saying.

It was reported that against this backdrop, commodity prices are riding high, with copper flirting with 10-year peaks.

“[Crude] oil prices also held near their March tops. US crude futures stood at US$65.65 (about RM270.64) per barrel, little changed on the day but just below yesterday's two-month high of US$66.76,” Reuters reported.

Chong Jin Hun