KUALA LUMPUR – The price of crude palm oil (CPO) may hit RM3,800 per tonne in the third (Q3) and fourth quarters of 2021, leading to an average price of RM3,678 per tonne this year, said OCBC Bank.
The bank’s commodity outlook report for 2021, released today, showed that CPO touched RM3,612 per tonne in Q1 2021, and is anticipated to reach RM3,500 per tonne in Q2 2021.
Economist Howie Lee said the bank expects the Malaysian Palm Oil Board’s closing stock to trend below two million tonnes throughout the year, fuelled by supply disruptions due to Malaysia’s Covid-19 situation.
“This is coupled with the increasing need to replenish vegetable oil stocks in China and India,” he said.
Lee, however, sees broad declines in the soybean sector capping further gains in CPO.
On crude oil’s outlook, OCBC has projected Brent Crude, the international benchmark for oil price, to peak at US$80 per barrel by year-end.
“We see a low possibility of crude oil returning to US$100 per barrel, instead, we expect it to peak at US$80, possibly by end-2021, as we see supply from OPEC+ returning in earnest beginning 2022,” said Lee.
According to him, the global supply balance is expected to stay in deficit throughout 2021, but may return to a surplus by 2022.
“Contrary to the International Energy Agency’s latest 2050 net-zero roadmap, we expect investments in oil and gas exploration to continue in the near- to medium-term,” he added.
On gold, OCBC believes that the precious metal’s price will peak at US$1,900 (RM7,818.50) per ounce, and is likely to end the year at around US$1,800 per ounce before steadying at US$1,500 per ounce by the end of 2022.
“Slowly but surely, we are seeing a tilt towards the hawkish camp within global central banks.
“Nothing matters more to gold than what the United States Federal Reserve’s stance on rate normalisation would be, but with the economic data looking relatively robust, the upward pressure on the US real interest rates could pressure further fund outflows from gold into risky assets,” Lee said. – Bernama, June 15, 2021
