The Case Of Palm Oil Price Rebound

~~ All the news below come as CPO (Crude Palm Oil) price rebounded sharply, nearly RM180 in 7 days. The market always have a fundamental story for every move. Anyway, we cannot ignore or reject the idea that "market participants' future expectation can actually influence the outcome of price". Expectations cannot be totally capricious. Somehow, they are rooted in something other than themselves which fulfill the logical aspect. 

Morgan Stanley's Review
Forecast for average cash CPO prices over the next two years by 1.9% to $815 a metric ton, about MYR2,612, due to the potential for lower production and tighter stock-to-usage ratios. It added that the initial impact of La Nina could be slightly negative as fresh fruit bunch collection would be hampered by rain, leading to possible supply tightness. Given the larger-than-expected El-Nino related decline in CPO yields this year, stock-to-usage ratios may narrow to 13.6% from 14.3%-14.9% over the next two years.  The rebound in prices may accelerate in the September-December period as CPO would regain competitiveness if China and Argentina resolve a trade spat over soyoil.The ending of the dispute will be positive for soyoil imports and hence prices of soy and rival vegetable oils.

Slower Output, Better Exports
Slower output growth this month due to lower yields in Sabah and Sarawak states has prompted trade participants and growers to cue forecasts for the on-month supply increase to 5% from a previous prediction of 10%. In its weekly weather outlook report, The Malaysian Meteorological Department said the country's top palm oil-producing state of Sabah is expected to receive more rain, ranging between 10mm and 100mm during the July 21-31 period, and crop production in that region may be affected. Greater-than-expected exports of palm oil from in Malaysia, the second-largest producer, pared June stockpiles to a 10-month low of 1.45 million tons, the country’s Palm Oil Board said this week.

India's Monsoon
India may need incremental supplies to meet domestic demand since there’s lack of supplies locally due to lower rainfall. India’s monsoon rains were 24 percent below normal last week, and 14 percent below average since the season began on June 1.