Hong Leong Investment Bank: Malaysia's palm oil inventories expected to remain stable in May, prices to decline after peaking in Q2
- Hong Leong Investment Bank analyst Chye Wen Fei stated that Malaysia's palm oil inventory levels in May are expected to remain stable, as a potential rebound in exports may be offset by continued seasonally high production.
- She expects crude palm oil prices to remain at a high level of 4,500 to 4,600 ringgit per ton in the second quarter, before declining from the third quarter onwards.
- Chye maintains an "overweight" rating on Malaysia's plantation sector, supported by the strong recent performance of crude palm oil prices driven by high crude oil prices.
- However, she warns that the current upward cycle could peak earlier than expected, and should the supply of other vegetable oils increase and become more competitive, this commodity will face mid-term risks.
- Hong Leong Investment Bank prefers pure upstream planters who have already locked in fertilizer costs for this year, naming Johor Plantations and SD Guthrie as top picks.
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