CPO could benefit from US-China trade war

PETALING JAYA: Analysts expect positive outlook for CPO price in anticipation of higher China demand for palm oil in the long run following the 25% tariffs slapped on US soybean.
PublicInvest Research foresees two outcomes from China’s proposed imposition of 25% tariffs on US soybean imports.
“Firstly, Chinese buyers will demand more soybean orders from Brazil, the second world largest soybean producer. Secondly, Chinese consumers might also switch their consumption pattern from soybean oil to palm oil, which has a bigger price advantage compared to US soybean imports.”
The research house said on the flip side, the US might stand to lose more as they need to quickly look for other markets for their soybean exports as China made up 58% of US soybean export market.
“Though US soybean supplies made up 35% of China’s soybean imports, it can easily be substituted with more Brazilian soybean supplies.”
PublicInvest Research maintains a “neutral” call on the plantation sector with a full-year CPO price forecast of RM2,500 per tonne.
Meanwhile, MIDF Research remains positive on the plantation sector due to improved demand outlook for palm oil in 2018.
“We believe that the good global economy growth in 2018 should lead to higher consumption per capita.”