POC2024

Palm Oil Price Outlook for 2024, Morning Session

Panel Members:
– Ms Ivy Ng, Head Of Research & Agri, CIMB
– Dr Sathia, Palm Oil Analytics
– Mr Lee Heng, Exec Dir SERC

Saya summarizekan point-point penting kat bawah. Bahasa melayu yang mudah faham punya saya summarize bawah english punya.

(English)

🌴 Supply

1️⃣ Malaysia
– Planters are positive on output growth in 2024;
1. No major weather impact in 2023 from El Nino as compared to Indonesia (but expected to see some repercussions on output in 2024)
2. Fertilizer supply chain disruption from Ru-Ukr war recovered, fertilizer acquisition improves.
3. Labour shortage issues resolving, return of workers expected to be more productive in the plantations

– Production & stock level are declining but expected to improve seasonally in coming months.

🚢 Demand

🇮🇩 Indonesia
– Planters expect slower output growth & production are expected to decline:
1. Had stronger impact from El Nino (more dry areas compared to Malaysia),

2. Ageing estates & replanting exercises
– Full year adoption of B35 Biodiesel program to boost local usage.
– Expectation of Indo to go into B40 program.

⬆️ All 3 points above lead to higher local Palm Oil usage in Indo -> Reduced exports from Indo -> Market demand shifting to Malaysian PO.

– Big imports during 22/23 leading to higher stocks in 23/24 -> Less PO exports expected from China & India

Pakistan
– Declining PO stocks in Pakistan, more imports expected to cover the stocks shortage in coming weeks + PO imports for Ramadhan weeks.

——
💵CPO premium over SBO/SFO since December due to production declining below than expected average, but will not continue in coming months due to appreciating prices of SBO/SFO

🚀 Geopolitical:
– Rising trade tension in China
– Ongoing Russia-Ukraine war
– Conflict in Middle East & Red Sea possibly progressing to be regional

——————

(B. Melayu mudah faham saya simplifykan)

🌴 Dari segi Supply;
– Production & stok sawit adalah negatif sejak awal Januari 2024, sebabtu price sekarang nampak supported dan semalam dah break 4000.

Q1 2024 short term nampak bullish, tapi price expected to decline sebab peladang sawit nampak production 2024 akan improve sebab 3 benda:
1. El Nino last year 2023 tak impact teruk sangat pada production sawit kita, so 2024 punya effect tak akan negatively impact output berbanding Indo.

Indo teruk kena effect El Nino, so production & output diorang impacted teruk.

🚢 Demand

Indonesia
Di Indo ada 3 benda yang tengah berlaku:
1. Impak El Nino, production & output sawit affected. Diorang struggling untuk kejar balik production. Less suply kat sana. (bullish untuk kita.

2. Biodiesel B35 full year adoption di Indo, maknanya banyak CPO sana akan digunakan untuk biodiesel.

Bila banyak CPO sana kat dalam Indo, tak banyak CPO exported. (pun sama, bullish untuk kita.)

3. B35 possibly akan jadi B40, maknanya LAGI banyak sawit retained dalam Indo. Less CPO exported.

So 3 benda kat atas ni, kalau Indo tak banyak export, orang luar nak cari CPO dari sapa?

= Dari kita. Maknanya market demand shift dari Indo kepada kita. So bullish to CPO price kita dari segi Indo.

Pakistan (also top importers CPO kita)
– Stok sawit sana declining makin berkurang, so dari Islamic countries expected untuk import CPO dari Malaysia.

– Ramadhan coming, so more imports.

= more imports dari diorang, more demand = positive export = bullish to price.

CPO premium lagi mahal dari Soya
CPO sekarang kalau korang tengok memang lagi mahal dari soya, tapi price makin naik. Patut kalau CPO mahal, orang akan lari pergi Soya so FCPO patut turun.

So panelist jangka in coming months soya akan rebound balik untuk recover balik price spread antara FCPO dan Soya.

Geopolitical Issues:
Sekarang ada 3 geopolitical issue yang tengah berlaku:
1. Russia-Ukraine war yang masih belum settle
2. Middle East conflict, Red Sea conflict jadi regional conflict
3. Trade tension di China

So far belum kacau apa-apa lagi.

Tapi brace your self prepare siap2 sebab kalau ada satu je pihak yang ter cross the line, terus akan affect price melompat.

Tiga-tiga panelist expect CPO akan maintain dalam range:
💸 3800 – 4100

🔼 Summary: 🔽
▶️ Short term bullish untuk Q1
▶️ Upside nak sampai lebih 4500 agak susah, banyak limiting factors macam production expected to improve.
▶️ Q2 agak uncertain, sebab banyak factor at play tapi expected untuk remain supported area 3800 – 4200.