KUALA LUMPUR: Most industry experts hold a moderate view on 2018 curde palm oil (CPO) price outlook as they expect the recovery in Malaysia and Indonesia’s production and the strength in ringgit to put downward pressure on CPO price.

PublicInvest Research said price outlooks given by industry experts at the Palm and Lauric Oil Conference 2018 organised by Bursa Malaysia were generally flat at current level with a forecast range of RM2,200-RM2,700/mt.

"However, CPO price is likely to be supported by the larger Indonesian biodiesel mandate due to the narrower gap between local palm methyl ester (biodiesel) and gasoil prices as well as a pick-up in demand in the near-term ahead of the Ramadan period in mid-May. 

"Hence, CPO price is unlikely to experience a sharp correction."

Some risks to production this year include Argentina's soybean disruption due to severe drought, which could reduce production by at least 13 million mt or 23% resulting in a total decline of nine million mt for global soybean production this year. 

Another drawback is the bigger biodiesel mandate that can be funded in Indonesia due to the narrower gap between the cost of local biodiesel and gasoil.

PublicInvest Research is maintaining its neutral outlook on the plantation sector with an unchanged average CPO price forecast of RM2,500/mt for 2018. 

Its top picks are Genting Plantations and Ta Ann for their pure plantation upstream focus, decent fresh fruit bunch production and young age profile.