KUALA LUMPUR: Crude palm oil (CPO) prices are anticipated to remain elevated
within the second half of this yr (H2 2022) on provide issues and improved demand outlook, in accordance to MIDF Research.
The analysis home stated prices can be supported by the upper edible oil prices on provide issues amid the extended Russia-Ukraine struggle, which disrupts the sunflower oil provide.
Also propping up prices can be the subdued manufacturing outlook for soybean in 2022/23 due the return of La Nina for the third yr in a row in South America, compounded by decrease planted space within the United States, in addition to higher demand outlook on improved financial actions, it stated in a notice.
“Despite our optimistic view on the sector, we do count on the CPO value to ease in H2 2022 however at a gradual tempo on concern of inflationary strain globally after attaining higher-than-expected CPO prices within the first half of the yr. As such, we preserve our 2022 CPO value forecast of RM5,500 per tonne at this juncture,” it stated.
In line with this, MIDF Research reaffirmed its “optimistic” stance on the plantation sector.
Key dangers to CPO prices embody the emergence of new COVID-19 variants leading to one other spherical of lockdowns worldwide, above-expectation stockpiles and provide of soybean and soybean oil, in addition to altering insurance policies in importing international locations, it stated.
Meanwhile, Kenanga Research has an “chubby” ranking on the plantation sector, saying one other good set of plantation earnings might be anticipated transferring ahead for the approaching April-June 2022 outcomes seasons.
“Thereafter, simpler earnings are possible however (they are going to) nonetheless remain sturdy on anticipated CPO value of RM4,500 per tonne for 2022 and RM4,000 per tonne for 2023. With manufacturing price of between RM2,000 and a couple of,500 per tonne, margins for the sector are nonetheless enticing,” it stated in a notice.
According to the analysis agency, the attraction of the plantation sector is not about earnings restoration however more and more about incomes resilience, particularly when inflationary and weakening financial issues are
clouding the market.
“Firstly, plantation earnings look set to keep wholesome on resilient demand for palm oil. The sector’s defensive asset-rich web tangible asset is one other attraction and valuations aren’t extreme both, particularly after the current market sell-down.
“However, with CPO prices possible to remain elevated into 2023, sturdy margins might be anticipated regardless of rising prices. We upgraded the sector from ‘impartial’ to ‘outperform’ a few month in the past, a view we’re sustaining (at present),” it added. – Bernama