Brexit Impact On Currency Positive For Palm Oil Prices

The Brexit impact on currency is seen positive to crude palm oil (CPO) prices, according to MIDF Research.

“We noticed that US dollar/ringgit rate has increased after the unexpected news of Brexit as global investors adopt the “flight to safety” mentality. The higher US dollar/ringgit rate improves CPO competitiveness against soybean oil (which is priced in US dollar) as CPO price (when translated to US dollar) will be lower,” the research house said in a report.

brexit impact for palm oil prices

It added that CPO has regained its competitiveness against soybean oil. From the recent low discount of US$54 (RM215.40) per tonne, CPO-soybean oil discount has more than doubled to US$114 per tonne currently.

“Hence, we believe that palm oil has regained its competitiveness level and should win global market share of vegetable oils going forward,” said MIDF.

It said risk to global soybean production has emerged and the news is positive to CPO price as this should lead to higher price of soybean oil due to lower supply of soybean.

MIDF maintained its average CPO price assumption of RM2,450 per tonne for the year 2016, which is 14% higher than 2015 average of RM2,153.50 per tonne.

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source: http://www.thesundaily.my/
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