Maybank Investment Bank said in a note on Tuesday that it has raised 2024/2025 CPO average selling price (ASP) forecasts to 4,200 ringgit (948 US dollars) per tonne (+9 per cent) and 4,000 ringgit per tonne (+8 per cent) given the year-to-date strength of CPO price.

According to the research house, the CPO price strength has caught the market by surprise over the past month, rapidly rising to above 5,000 ringgit per tonne, due to tight CPO supply in the region, especially in Indonesia.

It noted that Indonesia's crop was unexpectedly poor in the third quarter due to biological tree rest and lagged impact of mild El Nino, Xinhua news agency reported.

Meanwhile, Malaysia's CPO output appeared to have peaked in August, and is heading lower towards a low cycle period of the first quarter of 2025.

"The inverted CPO futures price curve suggests the present tightness in supply would last till early 2025," said Maybank.

CPO price is now at a premium over soybean, sunflower, rapeseed oils, and over gas oil, according to Maybank. It said a sharp price correction will only happen when supply normalizes.

MIDF Research said that the current CPO price movement is well supported by flattish supply in local production.

On the Indonesia side, it noted the production is still slower due to mixed weather effects, exacerbated by the implementation of B40 biodiesel starting in January 2025.

Besides, with Thailand suspending its exports until December to stabilize local cooking oil market, the research house said the palm oil supply dynamics now appear imbalanced.

MIDF also believes potential intensification of the Russia-Ukraine conflict will play a pivotal part in CPO price movements, citing its impact on sunflower oil production.

Meanwhile, analysts have foreseen palm oil stockpiles to stay low in the near term.

Hong Leong Investment Bank said in a note on Tuesday that it foresees Malaysia's palm oil stock level to stay below two million tonnes for the rest of 2024.

AmInvestment Bank believes that palm stockpiles in Malaysia would continue weakening until the second quarter of 2025 as the oil palm trees enter the low production period.

It is noted that Malaysia's palm inventory slid by 6.4 per cent to 1.9 million tons in October from 2 million tonnes in September. According to the research house, the monthly drop in inventory in October can be attributed to weaker production and higher exports.

It noted Malaysia's CPO production dipped by 1.3 per cent month on month to 1.8 million tonnes in October due to seasonality factors.