KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to trade in the range of between RM3,800 and RM4,300 per tonne in the next three months as production in top supplier Indonesia stagnates.
CPO futures on the exchange were traded at RM4,041 as at noon today.
"We expect the futures to trade in the range of RM3,800 and RM4,300 in April, May and June," he added.
ISTA Mielke GmBH executive director Thomas Mielke said the world exports of palm oil are expected to decline 2.5 million tonnes. This means it could go down to 51 million tonnes by September or October 2024.
The growth in world production of eight vegetable oils is forecast to slow down to 3.9 million tonnes in the second half of this year against 9.3 million tonnes last season.
"Indonesian palm oil production will probably be about stagnant in 2024 while Malaysian output will be near 18.6 million tonnes this year," said Mielke at the Palm and Lauric Oils Price Outlook Conference and Exhibition here today.
Palm oil's premium to soybean oil may only last another few weeks.
It may lose that premium in April or early May as prices of soybean oil and sunflower oil appreciate.
"The current premiums of palm oil over sun oil and soya oil prices will disappear in the next several weeks.
"This is likely to occur mainly by appreciating prices of soya oil and sun oil," he added.
"Despite weather problems in Brazil, global soybean production will likely post a surplus of at least 13 million tonnes in 2023-2024," he added.
Meanwhile, CIMB Investment Bank head of research and head of agribusiness Ivy Ng Lee Fang said a new rule in Indonesia, called the B35 mandate, might reduce palm oil exports.
"This could make the global supply of palm oil tighter and push up the price of CPO," she added.
Ng said the growth of palm oil supply worldwide is expected to slow down to 1.8 per cent in 2024. "This is lower than the usual growth rate of 3.8 per cent."
Factors like El Nino, replanting of palm trees, and older plantations are causing this slowdown, she said.
Ng pointed out that El Nino's impact on Malaysian palm plantations was small, but it hit Indonesian plantations harder. This might be particularly noticeable in the third quarter of 2024, she added.