KUALA LUMPUR, Dec. 11 (Xinhua) -- Analysts remain upbeat on palm oil prices next year after Malaysia's palm oil inventory fell to a three-month low in November and exports to China remained steady.
MIDF Research said in a note Wednesday that tight supply and expected strong demand from palm oil importing countries such as China would keep crude palm oil (CPO) prices to improve next year.
The research house anticipated CPO prices to trend higher at 2,450 and 2,600 ringgit per ton in 2020 and 2021, respectively.
The year-to-date average CPO price stayed at about 2,070 ringgit per ton, which was within its target CPO price of 2,090 ringgit per ton this year.
Malaysia's official data showed Tuesday that the world second largest palm oil producer stocks dropped 4.1 percent to a three months low of 2.3 million tons in November from its previous month, as weak output outweighed lower exports.
While its palm oil exports to most major countries fell, its shipment to China rose 23.5 percent month-on-month to 340,230 tons.
According to analysts, the increased demand could be due to buying activities ahead of the Chinese New Year, and Malaysia's improved trade dealing with China.
MIDF believed Malaysia's recent trade deals with China would reinforce the CPO demand from the second largest economy next year.
According to the research house, Chinese palm oil imports share from Malaysia has increased to about 13.5 percent as of November, from 11.3 percent in the previous year, after its palm oil imports jumped 40.4 percent year on year to 2.2 million tons.
Malaysia has earlier signed a memorandum of understanding with the China Chamber of Commerce of Foodstuff and Native Produce to increase purchases of palm oil by an additional 1.9 million tons between 2019 till 2023. It has also partnered with China's Bohai Commodity Exchange with the aim of supplying about 1.5 million tons of CPO to China by 2020.
Public Investment Bank Research also highlighted in a note that the palm oil imports from China would remain sustainable as demand normally picks up ahead of the Chinese New Year celebration.
Due tightening inventories in the coming months, the research house maintained its CPO price forecast of 2,600 ringgit per ton for 2020.