Despite the recent resurgence of palm oil prices above RM5,000 per ton, which has inspired some investment banks to turn bullish on the outlook for plantation stocks, some brokers are still cautious on the outlook for palm oil, saying that the price of palm oil is likely to fall significantly by the end of this year, and therefore maintain a “neutral” rating for the time being.
Tat Securities analysts pointed out that today’s palm oil prices have exceeded RM5,000 per ton, about 15% higher than last month, which may be due to reduced supply and trade friction between the United States and China.
Meanwhile, the analyst reckons that China may panic buy soybeans before Trump is re-inaugurated as US president and increases tariffs on Chinese goods, which may have driven the recent rise in palm oil prices.
He also cited data from Intertek and Amspec to China’s palm oil exports in the first ten days of November, a significant month-on-month decline of about 15%, indicating that the country’s palm oil exports in October after a big rise in November has fallen sharply, signaling a softening of demand.
He added that the easing of tensions in the Middle East could lead to a slight reduction in crude oil prices, which in turn would impact palm oil prices.
In any case, the analyst raised his forecast for this year’s average palm oil price to RM4,200 per tonne from RM3,900 per tonne, given the current stronger-than-expected outlook for palm oil demand.