KUALA LUMPUR (Commodity Online) : Global crude palm oil (CPO) prices are expected to remain firm in the first quarter of this year but may come under pressure in the second, as the South American soybean harvest begins, said MIDF Research.

In a research note on Thursday, MIDF also indicated that total output would continue to weaken, due to the low production cycle alongside the general bullishness of the world's commodities market.



Total output in January 2010 declined by -13.1 per cent month-on-month and minus 0.7 per cent year-on-year to 1.32 million tonnes.

The lower sequential monthly output was expected as oil palm trees generally exhibit a declining yield pattern from November to February, said the research house.

"We are positive but not overly bullish on the short-term outlook for CPO," said MIDF.

MIDF also reiterated its CPO price forecast for 2010 at 2,450 ringgitt per tonne. As fr 2011, it forecast the CPO price to be pegged at 2,650 ringgitt per tonne.

"However, if the general bullishness of the world's commodities were to intensify, we see an upside risk to our prevailing mean CPO forecasts," MIDF added.

Meanwhile, OSK Investment Research in its research note said it believes that the palm oil price could see near term strength on a low crop season.

"While maintaining a conservative average palm oil price assumption of RM2250 per tonne for 2010, we believe there could be a trading opportunity to the upside, in the near term," it added.

ECM Libra Investment in its research note said it expects to see some bargain hunting opportunities, should there be further correction from current price levels.

"Looking at share prices, a good deal of consolidation has been seen in recent weeks," it stated.

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