KUALA LUMPUR, April 12 — Public Investment Bank Bhd (PIVB) has maintained its "overweight” rating on the plantation sector with a full-year crude palm oil (CPO) price forecast of RM4,300 per tonne.

PIVB analyst Chong Hoe Leong said the rating was made after Malaysia’s March 2022 palm oil inventories fell more than expected and touched their lowest level in a year of 1.47 million tonnes, along with the biggest monthly exports increase since September last year.

"Palm oil exports advanced 14 per cent month-on-month (m-o-m) to 1.26 million tonnes, driven by all major consuming countries, namely China, European Union, India, Pakistan, and the United States,” he said in a note today.

Chong said wider soybean oil-palm oil price gap would also make the palm oil more attractive for the price sensitive buyers like India and Pakistan ahead of the Aidilfitri celebration.

He said soybean oil’s premium to palm oil price expanded to the current level of US$203 per tonne from US$96 per tonne previously, registering the steepest increase in eight months as softer soybean production in South America pushed the soybean prices dramatically in recent months.

In a separate note, CGS-CIMB Securities Sdn Bhd analsyt Ivy Ng Lee Fang projected palm oil stocks to rise 2.6 per cent m-o-m to 1.51 million tonnes by end-April 2022F (forecast).

She also expected palm oil output to fall 3.0 per cent m-o-m by end-April 2022F due to shortages of workers, and exports to decline 10 per cent m-o-m on competition with Indonesia’s palm oil exports.

"We believe CPO prices will trade at RM6,000-7,000 per tonne in April 2022F due to lower export supplies of sunflower oil crops from Russia and Ukraine and higher demand ahead of the Aidilfitri festival on May 2-3, 2022.

"However, this is partly offset by higher export supplies from Indonesia after it decided to abolish domestic marketing obligation on March 20, 2022 and replace it with a higher export levy,” she said.

Ng said Malaysian planters are likely to see strong earnings in the first quarter of 2022F (Q1 2022F) as average CPO prices rose 55 per cent year-on-year (y-o-y) and 19 per cent quarter-on-quarter (q-o-q) to RM6,039.5 per tonne, and CPO output grew 4.0 per cent y-o-y in Q1 2022F.

"We keep our average CPO price forecast of RM4,100 per tonne and ‘neutral’ sector rating,” she said. — Bernama