Weather woes, tight supply to keep CPO prices above RM4,000 a tonne: IOI Corp

KUALA LUMPUR: IOI Corp Bhd expects crude palm oil prices to remain above RM4,000 per tonne over the next few months, supported by seasonal production declines and potential weather disruptions linked to La Niña.

Group managing director and chief executive officer Datuk Lee Yeow Chor said the company expects a healthy price range of between RM4,000 and RM4,500 per tonne through the first quarter of next year.

"Palm oil prices have been having a good run since late last year, reaching between RM4,300 and RM4,500 recently.

"Although prices have eased slightly to below RM4,200 per tonne, I would say these are still good prices by historical standards," he said after IOI Corp's 56th annual general meeting.

Lee added that the recent price correction was partly due to unexpectedly high production in Malaysia, particularly in East Malaysia, where plantations have reported double-digit growth in output.

"Coupled with the news that China has resumed buying soybean oil from the United States, demand for palm oil has softened slightly," he added.

However, Lee expects a seasonal decline in production between November and February, which could support prices going forward.

"We expect production to go down and stocks to ease accordingly, creating a friendly environment for palm oil prices to stay healthy, above RM4,000 per tonne in the next three to four months," he said.

He added that the potential onset of La Niña could further disrupt harvesting activities, contributing to tighter supply.

On production, Lee said Malaysia's total palm oil output this year is expected to range between 19.3 million and 19.6 million tonnes, in line with the forecasts by the Malaysian Palm Oil Board and Malaysian Palm Oil Council.

Meanwhile, Lee said IOI Corp plans to expand its renewable energy ventures as part of its five-year strategic roadmap from 2025 to 2029.

"Renewables is one of our areas of emphasis. We are exploring solar energy and biomass utilisation," he said.

He said IOI Corp has identified several estate sites with high solar irradiance and close proximity to Tenaga Nasional Bhd's exchange stations, making them suitable for large-scale solar development.

"We are aiming to establish a solar plant of at least 300 megawatts. We have the land for it, but there's nothing concrete to announce yet," he added.