- The potential supply deficit could support elevated CPO prices in 2024, with marginal production growth in Malaysia offsetting weaknesses in Indonesia and other countries.
- Global vegoil supply faces constraints due to:
- Indonesia increasing domestic use,
- heightened biofuel usage in key oilseed-producing countries, and
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- Maintain OVERWEIGHT, and focus on Malaysian plantation companies and companies that have better-than-peers production growth.
Heightened CPO prices throughout 2024
- The forecasted supply deficit is set to uphold heightened CPO prices throughout 2024, propelled by the following factors:
- CPO production is expected to experience marginal growth, primarily due to the impact of El Nino in 2H23. Among the major palm oil-producing nations, Malaysia is likely to stand out as the country with the highest production growth, helping counterbalance weaknesses in other key producing countries such as Indonesia, Thailand and Papua New Guinea.
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- Despite an abundance of oilseeds globally, the availability of vegetable oil in the global market remains tight. This scarcity is attributed to heightened biofuel usage in key producing countries and reduced oilseed crushing due to weakened demand for animal protein.
Key catalysts
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Above is the excerpt from report by UOB Kay Hian Research.
Clients of UOB Kay Hian may be the first to access the full report in PDF @ https://www.utrade.com.sg/.
Leow Huey Chuen UOB Kay Hian Research | Jacquelyn Yow Hui Li UOB Kay Hian | https://research.uobkayhian.com/ 2024-01-15
