Malaysia's leading securities and investment group, Affin Hwang Investment Bank, said in a note that it believed that CPO prices could be supported at 3,700 ringgit (846 U.S. dollars) to 4,000 ringgit (914 dollars) per ton in the short-term, given the seasonally low production period at major producing countries of Indonesia and Malaysia due to the monsoon season.
However, for the full year of 2023, it anticipated CPO prices to potentially be lower year on year given the expectation that global production of the eight major vegetable oils will increase further in the 2023 season.
Also, it said the looming global recession could potentially curb consumption in many markets.
According to the research house, there are many uncertainties and price-determining factors to watch out for, which includes the global harvest progress and actual yields achieved for all major edible oils, quantum of purchases from major importing countries, uncertainty over the export corridor for Ukrainian products, biodiesel production, weather developments, as well as Malaysian and Indonesian production and stock movements.
"We are keeping our CPO average selling price assumptions of 3,100 ringgit (709 dollars) to 3,200 ringgit (732 dollars) per ton for 2023," it said.
Meanwhile, Hong Leong Investment Bank Research said in a note that it maintained the 2023-2024 CPO price assumptions of 4,000 ringgit (914 dollars) per ton to 3,800 ringgit (869 dollars) per ton.
"We believe CPO price will sustain at above 4,000 ringgit (914 dollars) per ton over the next few months, possibly until the first quarter, and start trending down from the second quarter onwards," said the research house.
It said the CPP stockpile will likely remain on a downtrend in the next few months, on the back of seasonally low production cycle.
CGS CIMB, on the other hand, said in a note that it expects CPO prices to average 3,800 ringgit (869 dollars) per ton in 2023.
It predicted that the workers shortage issue would ease in mid-2023, boosting palm oil production.
However, it added that costs of production may stay high due to the full-year impact of minimum wage and higher fertilizer costs.
CGS CIMB expects CPO prices to soften from the second quarter onwards this year as palm oil output recovers with the entry of more foreign workers, while slower global growth could curb demand.
According to CGS CIMB, Malaysia's total palm oil output grew 2 percent to 18.45 million tons in 2022, as the rising mature palm oil area more than offset lower CPO yields due to shortages of foreign workers.
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