July 7, 2021

‘Positive’ Analysts About This Sector

 Maybank Investment Bank (Maybank IB) Research maintained a ‘positive’ recommendation on the regional plantation sector based on expectations that the increase in crude palm oil (CPO) prices will exceed RM3,000 in the near future.

Citing the views of Apical Group President Datuk Yeo How, Maybank IB Research said CPO prices were expected to remain positive due to limited global supply conditions as well as expectations of a recovery in palm oil production in the second half of this year which was difficult to realize.

Maybank IB Research had previously organized a commodity price outlook session with How to get his views.

Although he did not specify a target price, How was of the opinion that the price of CPO was unlikely to be below RM3,000 a tonne in the near future, in fact it was tracking rival oil price indicators.

"As for palm oil, he believes Malaysia's stockpile will not exceed 1.8 million tonnes by the end of this year," he explained as reported by Bernama.

Adding Maybank IB Research, How also opined that the market would not see a stronger recovery in palm oil in the second half of this year as previously projected, due to heavy rains over the past year.

According to him, this is also largely due to smallholders who have done less fertilization efforts since 2018.

Maybank IB Research said, overall, the dynamic aspects of supply and demand also support prices for 2022.

"However, his concern is in terms of weather uncertainty and government policy," he said.