KUALA LUMPUR (Feb 18): Malaysian crude palm oil (CPO) futures prices rose past RM6,000 a tonne for the first time to their all-time high on Thursday evening (Feb 17) after climbing as much as RM87 to RM6,054 in Bursa Malaysia’s extended trading session between 9pm and 11:30pm in what analysts describe as a palm oil industry super cycle amid supply constraints during seasonal low production in the first half of the year when demand is also expected to grow ahead of Hari Raya Aidilfitri in May 2022.

At 10:55am on Friday, March 2022 CPO price rose RM33 to RM6,000 a tonne after the commodity was traded at between RM5,986 and RM6,054 so far on Friday.

March 2022 CPO, which opened at RM6,000 a tonne at 9am, registered bid and ask prices of RM6,000 and RM6,002 respectively. 

Public Investment Bank Bhd analyst Chong Hoe Leong wrote in a note on Friday that the palm oil industry witnessed an unprecedented super cycle with CPO futures topping RM6,000 a tonne on Thursday for the first time. 

"We turn bullish on the sector as we expect a strong earnings trajectory for the plantation companies. We think CPO prices will remain strong in the first half of 2022 given the tight global vegetable oil supplies and also supply constraints for palm oil in the top two producing countries. 

"Hence, we revise up our CPO price assumption from RM3,500/tonne to RM4,300/tonne and RM3,800/tonne for 2022 and 2023, respectively,” Chong said.

He said "palm oil inventory is expected to remain tight in the near term” as the first half of the year is the seasonal low production period for the oil palm plantation sector and amid anticipation of "growing demand" ahead of Hari Raya Aidilfitri in May 2022.

Chong said Public Investment thinks CPO prices will remain strong in the first half of 2022.

"Thereafter, CPO prices should ease as we expect production to increase when the foreign workers start returning to Malaysia,” he said.

Malaysia's January 2022 total palm oil inventory, comprising CPO and processed palm oil, unexpectedly fell from a month earlier as export of the commodity dropped by a larger quantum compared to its production, the Malaysian Palm Oil Board (MPOB) said on Feb 10, 2022.

In a statement, MPOB said Malaysia's January 2022 total palm oil inventory fell 3.85% to 1.55 million tonnes from 1.61 million tonnes in December 2021 as CPO production dropped 13.54% to 1.25 million tonnes from 1.45 million tonnes.

MPOB said the country's palm oil exports declined 18.67% to 1.16 million tonnes from 1.42 million tonnes.

Malaysia's January 2022 total palm oil inventory's 3.85% drop was unexpected based on a Reuters survey which indicated that the country's total palm oil inventory could have risen 0.34% during the month.

The survey involving traders and analysts showed that the country's CPO production could have shrunk 10% in January 2022 while "exports are expected to slump 21%", the newswire reported.