Palm oil export earnings for this year is targeted to be 5% higher than last year's record RM80.4bil, according to Plantation Industries and Commodities Deputy Minister Datuk Hamzah Zainudin.
However, Hamzah said the projection depended on the world economy and that it would be achievable if global economic environment assumed some stability.
Last year's export earnings jumped 34.4% from RM59.8bil in 2010.
Hamzah said among the challenges faced by the industry was Indonesia's new crude palm oil (CPO) export tax, which gave Indonesian downstream players an advantage as they would get cheaper feedstock compared with their Malaysian counterparts.
“We are looking at how to help refiners here survive on a long-term basis. The industrialisation programme that indonesia is undergoing is going to take about two years and once its industrialisation is on the right footing, it would go back to the market forces of supply and demand.
“That's why we are suggesting that for Malaysia, we should look at integrated policies covering upstream to downstream activities,” he said at the Malaysian Palm Oil Council's (MPOC) annual Reach & Remind Friends of the Industry seminar and dialogue.
Meanwhile, NextView Group chief for market strategies Benny Lee projected bullish performance for CPO prices in the short term but slightly bearish outlook over the long term.
“There was a downtrend in early 2011 but the CPO price has been developing an uptrend since October last year from RM2,800 per tonne to RM3,200 currently. I expect it to continue this uptrend,” Lee said.
He maintains a bullish forecast until March this year at RM3,450 per tonne if the prices could break the immediate resistance of RM3,230.
“It is possible (for the price) to break the resistance level and move to the RM3,450 high in the next two months but if that does not happen, we will see another correction in the longer term,” he said.
The other challenges faced by CPO would be the persisting global economic uncertainties and the weakening US dollar against the ringgit.
“(Historically) the CPO price is led by the US dollar and the question is whether the US dollar will strengthen and pull the CPO price up because it has been weakening in recent weeks,” he said.
Lee expects the greenback to weaken against the ringgit to 3.025.
In his cycle analysis, Lee noted that there was usually a significant drop in the CPO price every 46 months, sandwiched by two distinct peaks.
“Since the previous plunge was in October 2008, the next one is predicted to be in July this year,” he said.
However, “prices should rebound gradually, especially after October when production is expected to decline.”
For the year, Lee expects the CPO price to be pressured to a RM3,000 support level and an extreme low of RM2,650 if external factors prove treacherous.
His forecast average CPO price is RM2,950, more bearish than last year's RM3,500.
CPO futures were traded at RM3,125 per tonne yesterday.