• On Day 2 of the Palm Oil Conference, speakers spoke on sustainability and demand-supply dynamics for vegetable oil prices.

• Madam Renaka of Sime Darby Plantation said that to reduce carbon emissions, SDP will be accelerating the use of renewable energy, embarking on land use transformation and enhancing engagement with suppliers.

• Ms Perpetua George of Wilmar International said that Malaysia is a low-risk country. Hence, there is a possibility that it may be be exempted from the EU’s anti-deforestation regulations. Malaysia is low-risk as MSPO is already mandatory and part of the regulatory framework. In addition, deforestation rate is low in Malaysia and the country already has all of the data required by the EU.

• Thomas Mielke of Oil World did not give a price forecast for CPO. Instead, he predicted that RBD olein will hover at an average of US$1,150/tonne (RM5,175/tonne) from July to December 2023. This assumes that El Nino would only be moderate and the Black Sea Grains Corridor is still open. Thomas believes that CPO prices will rise in 2H2023 as production of sunflower and rapeseed oil is expected to be weak.

• Thomas also forecasts Malaysia’s CPO production to rise by 0.6mil tonnes to 19mil tonnes in 2023F due to a higher number of workers. Previously, he estimated an increase of only 0.3mil tonnes. Thomas expects CPO production in Indonesia to improve by 1.2mil tonnes to 47.7mil tonnes this year. His original forecast was a growth of 2.2mil tonnes.

• James Fry of LMC International predicts average BMD CPO price to be RM3,760/tonne in 2023F. He expects CPO prices to fall to RM3,350/tonne by year-end. James reckons that CPO prices will decline in line with gasoil prices. He forecasts gasoil prices to decrease by US$68/tonne by December 2023.

• Dorab Mistry of Godrej International said that 3rd month MDEX CPO price will trade between RM4,000/tonne and RM5,000/tonne from now until August 2023. If there is no El Nino, CPO prices would fall after August. The biggest factor driving CPO prices is expected to be weather. A declining USD would also support commodity prices and vice versa.

• According to Dorab, Malaysia’s palm stocks will be drawn down until May and will fall below 2mil tonnes. Based on channel checks, he said that Indonesia is still implementing B30 and not B35. He thinks that Indonesia may ban CPO exports for a week to ensure sufficient domestic supply of cooking oil.

Source: AmInvest Research - 9 Mar 2023