RAM Ratings forecasts CPO prices averaging between RM2,200/MT and RM2,400/MT in 2015

Published on 05 February 2015 RAM Ratings expects CPO prices to average between RM2,200/MT and RM2,400/MT in 2015, against a backdrop of ample edible oil supply and subdued consumption growth. The weak ringgit is expected to provide a cushion against an otherwise sharper fall from 2014’s average price of RM2,408/MT. As a growing mature hectarage in key palm oil-producing countries underpins CPO production growth in 2015, strong soybean production in the US and expectations of a bumper harvest in South America are anticipated to keep the edible oil market well supplied. The heightened competition between edible oils could keep CPO prices in check while demand growth is expected to be lackluster. Meanwhile, weak crude oil prices reduce the economic viability of CPO use in biodiesel, notwithstanding demand from government-driven mandates. While we note of the increased attractiveness of CPO due to the weaker ringgit, the build-up of inventory in the medium term would be bearish on the commodity’s prices. CPO prices may be supported by the lower production in the first half of the year and potentially weakening in the second half when production seasonally peaks. Please click here to download RAM’s quarterly CPO price outlook. Media contact Juliana Koay (603) 7628 1169 juliana@ram.com.my