KUALA LUMPUR: Crude palm oil (CPO) prices surged past RM2,200, a level not seen since last September, on a rally in crude oil and soybean oil as well as market anticipation that Malaysia’s palm oil inventories could drop further.
CPO futures for June delivery on the Bursa Malaysia Derivatives closed at its intra-day high of RM2,269 a tonne, up RM104.
April delivery and May delivery rose RM115 and RM140 to RM2,396 and RM2,370 a tonne, respectively. The Malaysian Palm Oil Board (MPOB) is scheduled to announce production and inventory figures today.
Government and MPOB officials estimated that palm oil inventories for March could fall further to 1.5 million tonnes. Since December, palm stocks had declined steadily, to 1.99 million tonnes as planters embarked on replanting and new planting exercises.
The downtrend in palm stocks continued, with palm oil inventories in January and February falling to 1.83 million tonnes and 1.56 million tonnes, respectively.
“The market is expecting palm oil inventories to fall between 1.3 million tonnes and 1.5 million tonnes, hence the rally in CPO on April 9,” a palm oil trader told The Edge Financial Daily via telephone on April 9.
He also said gains in CPO were also led by the rally in crude oil and rival soybean oil.
Plantation stocks on Bursa Malaysia rose as well, with Kuala Lumpur Kepong Bhd among the top gainers.
Kuala Lumpur Kepong Bhd closed up 30 sen to RM11.10, IOI Corp Bhd gained four sen to RM4.20, Sime Darby Bhd added five sen to RM6.10 while United Plantations Bhd rose 10 sen to RM10.30.
Asiatic Development put 14 sen to RM4.74 while Boustead Holdings Bhd was up 10 sen to RM3.60.
AmResearch in a note, had raised its CPO price assumption to RM2,500 a tonne as the drop in palm oil supply exceeded expectations.
“We had earlier anticipated palm oil production in Malaysia to decline on the back of agronomic adjustments coming from fertiliser reduction and replanting. But CPO output has since weakened further due to unfavourable wet weather, which affected fresh fruit bunches yields.”