MARKET BUZZ: Palm Oil Prices May Rise Near Term On Supply Squeeze, Bio-Fuel Demand-MARC
KUALA LUMPUR (Nov 30) -- Palm oil prices may rise in the near term on supply constraints and show "slightly positive" trend going into 2024, says MARC Ratings. House forecasts futures prices to range between MYR3,700 and MYR4,100 for remainder of 2023 and into 2024.
Notes, production typically declines after peak in September or October with 1Q having lowest output, which will shrink inventories and buoy prices; bio-diesel usage to be key in driving demand. Says, seasonal production trends, hotter climate conditions, and increasing demand for bio-fuels are expected to "exert upward pressure on palm oil prices."
Flags upside risks that may lead to prices staying above MYR4,000 from lower-than-expected soybean and sunflower seed production, as well as "technical convergence" between prices of palm oil and soybean, which will shrink discount gap. Benchmark palm oil futures for February delivery now at MYR3,895 on Bursa Malaysia Derivatives.