Palm oil prices remain bearish amid present weak La Nina

Source: Xinhua| 2018-02-20 14:12:06|Editor: Xiang Bo
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KUALA LUMPUR, Feb. 20 (Xinhua) -- The crude palm oil (CPO) prices fail to be lifted as the present La Nina has only caused little damage to palm oil production, analysts in Malaysia said Tuesday.

Maybank KimEng's analyst Ong Chee Ting said in a report that although the La Nina that disrupts normal weather patterns did hurt Argentina's soybean production, no major floods were reported in the world's two largest palm oil producer -- Indonesia and Malaysia.

While there were occasional floods reported in parts of Sabah, Sarawak and East Coast of Peninsular Malaysia in late 2017 and early 2018, Ong believed it was nothing beyond the usual, and he suggested that the situations were under control with minimal damages.

"CPO price has failed to be lifted thus far given its ample stockpile and recovering production prospects post 2015-16's strong El Nino (the opposite effects of La Nina)," he added.

He also believed the higher-than expected palm oil production and stockpile in 4Q2017 had curbed CPO prices.

Malaysian Palm Oil Board indicated earlier that Malaysia palm oil output may hit 20.8 million tonnes this year.

Having said that, Ong does expect a little more seasonal upside to CPO prices as the market enters low crop months in February to March.

Thus, he holds a neutral view on the plantation sector, with regional average CPO price this year falling to 2600 ringgit (668 U.S. dollar) per tonne, from 2792 ringgit last year.