POINTERS: CPO Price Trend in the 2nd Half of 2017 - Technical and Fundamental Views

By: Ms. Ivy Ng

Ivy Ng is currently the Regional Head of Plantations and Head of Malaysia Research in CIMB. She is a CFA charterholder and holds a BSc in Economics from the London School of Economics. She has been covering the palm oil sector since the mid-90s and expanded her coverage to include the regional palm oil companies since 2005.

She joined CIMB in 2005 and currently covers regional plantations and conglomerates. Ivy has been an investment analyst since 1994, with prior stints in Affin-UOB, Peregrine Research, Hwang-DBS Securities and GK Goh Research.

Ivy was ranked number one by Asiamoney polls in the Malaysian industrial sector in 2014 to 2016 and utilities sector in 2007 and 2008. She was also voted Malaysia’s best power analyst in 2007 and best plantation analyst in 2008 by The Edge.

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This paper will discuss the various factors that are expected to influence CPO price direction and in turn palm oil trades for 2H17. We will also provide our technical view on CPO price directions.

In 1H2017, CPO price fell 20% to RM2,601 per tonne as palm oil supply recovers from the El Nino effect.

However, there are differing view as to whether the CPO price will be sustainable at current level in 2H17, when palm oil supply rebounds on the back of higher FFB yields.

The main bullish factors for prices continue to be the low stockpiles and higher biodiesel mandates in Indonesia.

Factors currently capping CPO price upsides are expectations of stronger palm oil supplies in 2H17 and competition from other edible oils.

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Questions & Answers (4) :

Mohamad Raid Majzoub

6 years ago

Dear Ms. Ivy Ng, We noticed a huge increase in PKO recently, can we know your forecast on it and can you highlight the main reason behind this increase. Thank you.

POINTERS SECRETARIAT:
Posted on behalf of the speaker : I would like to clarify if the question refers to PKO supply or prices? PKO supplies are linked to palm oil supplies.
6 years ago

Mohamad Raid Majzoub:
Hi, PKO prices. Thank you.
6 years ago

POINTERS SECRETARIAT

6 years ago

Posted on behalf of a participant : You mentioned that the lowest traded price up to July 2017 is at RM2,390. Please advise which month are you referring to as I understand that this year lowest price is RM 2,425 based on active month. Please also advise if you are referring to daily, weekly or continuation bar chart?

POINTERS SECRETARIAT:
Posted on behalf of the speaker; I am using Bloomberg weekly continuation chart KO3. Yes. There is a slight difference to the real price being traded mainly because of Bloomberg’s own definition of how it roll-over for the continuation chart. Unfortunately, they don’t do it on the 16th of each month.
6 years ago

Anthony Yap

6 years ago

Hi Ms Ivy; On your slides #11; the discount price of SBO vs CPO calculation, you are based on Physical Prices OR Futures Market prices to derive the discount?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : No it is based on spot prices published by MPOB and it is the international prices landed in Europe.
6 years ago

POINTERS SECRETARIAT

6 years ago

Posted on behalf of a participant. Currently Crude Coconut Oil (CCNO) premium over Crude Palm Kernel Oil (CPKO) is about USD500-650/MT (Based Rotterdam basis). Can this huge of premium can be sustain? Will it impact CPKO prices (or demand)? What will be the forecast production number for CPO and CPKO in year 2018?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Yes, as long as the Crude Coconut Oil supplies remain tight. If coconut oil prices remain high, it will be positive for CPKO. We have not released our projection figures for 2018.
6 years ago