KUALA LUMPUR, Jan 3 – Malaysian planters’ earnings in 2024 will likely be better than last year, owing to lower unit costs on lower fertiliser expenses and higher productivity, said Maybank Investment Bank (Maybank IB).
The investment bank said the crude palm oil (CPO) price trend this year would broadly be the same as in 2023 and maintained its forecast for an average selling price of RM3,700 per tonne, which is below 2023’s RM3,830 per tonne.
This was premised on good South American soybean harvest, and anticipated lower year-on-year unit cost, it added.
“In terms of price trend, CPO price is expected to be off to a good start in the first quarter of 2024 owing to the seasonally low output cycle, and trend lower by mid-2024 on anticipation of seasonally better output in the second half of 2024,” Maybank IB said in a research note today.
Also, the market is monitoring the ongoing El Nino that has delayed soybean planting in Brazil.
Maybank IB said a crop failure may lead to a spike in CPO prices, and at the same time, the market fears that a global recession may weigh on CPO prices.
“If unfavourable weather conditions persist in Brazil over the next two months, it could increase soybean prices, which should benefit CPO prices indirectly too,” Maybank IB said.
It said the effects of high United States interest rates, the Russia-Ukraine and Israel-Hamas wars, and the financial health of many countries pose many uncertainties to global demand.
A weaker-than-expected demand would lead to a higher-than-expected stockpile, dragging down CPO prices, it added.
Meanwhile, the investment bank noted that the Malaysian government is conducting a comprehensive study on taxes in the palm oil sector and hopes to complete the study sometime in 2024.
“Among other things, planters are asking for a review of the plantation sector’s windfall profit levy.
“At present, a levy of 3.0 per cent is chargeable per tonne of fresh fruit bunch (FFB) on CPO prices above the RM3,000 per tonne threshold in Peninsular Malaysia and above the RM3,500 per tonne threshold in East Malaysia,” said Maybank IB.
