KUALA LUMPUR: The uptrend in the palm oil stockpile will likely continue into July 2024, according to Hong Leong Investment Bank Bhd (HLIB).
The palm oil stockpile remained on an uptrend, rising by 4.3 per cent month on month (MoM) to 1.83 million metric tonnes in June 2024, as the slump in exports more than offset lower production.
HLIb said the stockpile came in slightly higher than the Bloomberg survey's estimate, due mainly to lower-than-expected exports.
Stockpiles will likely remain on the uptrend in July, on the back of the continuation of the seasonal uptick in cropping patterns.
"This will likely offset potential higher export demand arising from palm's improved price competitiveness against soyoil and the absence of holiday-driven demand," it said in a note.
On exports, HLIB said palm oil exports declined by 12.8 per cent to 1.21 million metric tonnes in June 2024, and the bank believes the decline was due mainly to palm's weak price competitiveness over competing oils, and the absence of festive-driven demand.
According to data published by cargo surveyor Intertek Services, lower exports in June 2024 were due mainly to lower exports to Africa, Asia, Oceania, China, and the EU.
"We maintain 2024–2025 crude palm oil (CPO) price assumptions of RM4,000 per tonne and RM3,800 per tonne, as well as our neutral stance on the sector.
"For exposure, our top picks are IOI Corporation Bhd (buy; target price: RM4.49) and Hap Seng Plantations Holdings Bhd (buy; target price: RM2.16)," it added.