Alliance Research says if there were to be a price rally for crude palm oil (CPO), it will not go beyond the RM2,800 per metric tonne level this year in view of the continued export competition with Indonesia and a healthy year-on-year production.
It also said that while stocks had reduced on a month-on-month basis, they remained high.
"This should see CPO prices recovering further in the coming weeks as shipment data is indicating a positive demand and we see that prices could trend up to RM2,800 per metric tonne over first quarter 2013." Alliance said in a note today.
It said that while the mild decline in inventories from improved usage of palm oil was expected to continue in February and likely to support CPO prices, it did not expect the price to go further up amid an anticipated volatile year.
It maintained an "underweight" recommendation on the sector, projecting CPO prices to average at RM2,6000 per metric tonne.
In a separate note, Hong Leong Investment Bank said a recent report had said that China's quarantine authorities have not rejected any palm oil cargoes from Malaysia in January as the quality was in line with the national standard.
"However, we remain cautious on such implementation for now, as we believe it may still be premature to conclude that such a risk has been eliminated."
The investment bank also maintained an "underweight" stance on the sector, saying that CPO price recovery would remain capped on demand risk from certain major palm oil consuming countries and higher CPO supply this year in the absence of weather disruptions.-- Bernama
Read more: CPO price not to go beyond RM2,800 http://www.btimes.com.my/Current_News/BTIMES/articles/20130214162936/Article/index_html#ixzz2Kv2A1200
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