CPO prices to remain firm this year

Research houses generally are “overweight” on the plantation sector, with most of them anticipating oilseeds to sustain their price strength for at least the next 12 months, before a possible supply increase.

A notable exception is Aseambankers Equity Research, which has “neutral” stance on the plantation sector.

It said the sector’s upcycle has lasted three years and a slowdown in the global economy precipitated by the US subprime issue could trigger a reversal of the CPO price trend. CPO prices will average at RM2,500 a tonne in 2008, according to its forecast.

CPO futures rose to a historic high of RM3,097 per tonne on Dec 27, spurred by the spike in crude oil prices to US$97 a barrel mark on geopolitical concerns following Pakistan’s former prime minister Benazir Bhutto’s assassination.

DBS Vickers Securities equity research analyst Ben Santoso said prices of vegetable oils and crude oil only have a correlation amidst a supply shortage and were expected to decouple otherwise.

“CPO and crude oil will not have a strong correlation for ever, as vegetable oil will be mainly used for food and that will have a bigger influence on the (CPO) prices,” he told The Edge Financial Daily.

DBS Vickers is maintaining an upward bias on CPO for 2008, with an average price of RM2,700 to RM3,000.

Sign up for our
regular news updates

Latest Bioenergy Industry News

•   Biofuel Subsidies in China
•   CME: Crude Oil Prices Impact Livestock Production
•   €50m Set for Wind Farm Investment
•   Planning Notice for Aegir Offshore Wind Farm Submitted
•   Agreement on Viability of Mammoth Ethanol Facility
•   EPA Applauded for Biodiesel Rule in 2009
•   Type of Physic Nut to Undergo R&D
•   Sweet Potatoes Entering Biofuels Arena
•   Investments Funded in Ethanol-making Microbe
•   Sugarcane Expansion to be Restricted