Crude palm oil prices are expected to recover strongly

Crude palm oil (CPO) prices are expected to recover from strong early next year on slowing the production and the better question, according to Rabobank International.

Pawan Kumar, Rabobank the associate director for food and agribusiness research and advice for Southeast Asia, said during the short term Outlook for CPO prices remained moderate to high supplies, the medium to long term Outlook for the commodity was still positive.

He said CPO prices could reach an average 2,850 ringgit per tonne in the first quarter of next year.

"This would come after an unexpectedly slow performance in the three months to December 2012 with CPO prices average at 2,350 ringgit (US $ 767) per metric tonnes expected," he said yesterday during a lsuncheon interview about the prospects for the palm oil and fertilizers markets here.

He said CPO prices remained weak now because of record high stocks amid subdued global demand. The three-month CPO futures are currently trading around employed 2,450 ringgit per metric ton, after recovering from the year low of 2250 ringgit per metric ton in early October.

With the CPO prices still trading at such competitive levels, analysts expect demand for palm oil to improve over the medium term.

In fact, Rabobank expects more rely on palm oil come next year as stocks of the product main competitor, soy, would be included.

The long-term Outlook for palm oil remained positive, Pawan fought, and that this important palm oil producers, such as Malaysia and Indonesia, which jointly accounted for 85 percent of global palm oil production would benefit.

While both countries continue expanding their expected Pawan production of palm oil, such effort would prove to be challenging due to several factors, particularly land availability.

Rabobank expected the focus on regional expansion for the production of palm oil in Indonesia remain as any country Malaysia in another two to three years can run.

According to the financial group, Indonesia still had about 16 million to 17 million hectares of land suitable for planting, compared with 500,000 ha of land available in Malaysia.

Rabobank also said that the economy remained positive on the prospects for Asia. Of the Group Director and head of financial markets research for Asia, Adrian Foster, said:

"Asia continues to be a positive factor for the economy with China the main globals is to watch, while Indonesia is increasingly relevant and Malaysia has increased in relevance."

Rabobank said that China's gross domestic product (GDP) growth may accelerate to 8 percent next year, an estimated 7.7 percent after a growth in 2012, while that of India to 6.2% in 2013 of 5.6 percent this year can accelerate.

Economy of Malaysia, on the other hand, was expected to grow 5 percent next year, after a growth at an estimated 5.2 percent this year. Foster admitted that his Outlook for the economy of Malaysia rather bullish compared with the general consensus that Malaysia was 4.7 percent and 4.9 percent GDP grow on expected for 2012 and 2013, respectively.

* US $ 1 = 3.0 ringgit