CPO prices not to face downward pressure, research

CPO prices not to face downward pressure, researchAccording to a new research, the price of Crude palm oil (CPO) may not face downward pressure due to the increased production of palm oil.

Kenanga Research said that the fall might be limited and due to weak exports. The research institute said that extra supply is expected to be taken by Indonesia's biodiesel mandate and the lower exports will be a short term phenomenon. Experts said that the effect of a bumper soybean harvest from South America is expected to remain only for a month.

"Malaysia's palm oil stocks level of 1.69 million metric tonnes in March 2014 came in six per cent higher than the consensus estimate of 1.60 million metric tonnes as production unexpectedly surged 17 per cent month-on-month," the research house said in a note.

The research house also said that oil palm trees began their productioncyclerise after a ten years halt. The researchers said that they expect theCPO prices to rise in themid to long term due to sustainable demand recorded from the Indonesian biodiesel industry as well as stable food demand. Others also said that Malaysia's palm oil inventory might not be sustainable in the long term.