Who would have thought that this Ramadan would not only bring the excitement of breaking the fast, but also a new wave of crude palm oil (CPO) prices to surge.
Maybank Investment Bank (Maybank IB) expects CPO to trade at RM4,500 to RM5,000 per tonne as early as Ramadan 2025.
This forecast is driven by a low production cycle in the first quarter and the strong impact of the La Nina phenomenon that brought excessive rains that squeezed supply and increased price pressure.
In addition, a CPO supply shortage in Indonesia, driven by the Indonesian Government's B40 biodiesel mandate, has caused a price surge in late 2024.
However, this surge may face a major test.
The POGO subsidy funds that support the mandate are predicted to run out by the end of the first quarter of 2025.
Maybank IB stated that this situation poses a significant risk to prices after the first quarter.
After the first quarter ends, CPO prices are expected to return to hovering between RM3,500 and RM4,500 per tonne as seasonal production recovers.
The firm maintains its forecast for an average price of around RM4,000 per tonne for the full year.
The B40 mandate may be shaky but can Jakarta continue to afford high prices, or will subsidy cuts shake up the market?
