Malaysia's palm oil prices unlikely to drop next year hinh anh 1Workers stand near palm oil fruits inside a palm oil factory in Sepang, outside Kuala Lumpur. (File photo: Reuters)

Hanoi (VNA) - Analysts remain upbeat on palm oil prices next year after Malaysia's palm oil inventory fell to a three-month low in November and exports to China remained steady.

MIDF Research said in a report that tight supply and expected strong demand from palm oil importing countries such as China would keep crude palm oil (CPO) prices to improve next year.

It anticipated CPO prices to trend higher at 2,450 and 2,600 ringgit per tonne in 2020 and 2021, respectively.

The year-to-date average CPO price stayed at about 2,070 ringgit per tonne, which was within its target CPO price of 2,090 ringgit per tonne this year.

Malaysia's official data released on December 10 showed that the world second largest palm oil producer stocks dropped 4.1 percent to a three months low of 2.3 million tonnes in November from its previous month, as weak output outweighed lower exports.

While its palm oil exports to most major countries fell, its shipment to China rose 23.5 percent month-on-month to 340,230 tonnes.

According to analysts, the increased demand could be due to buying activities ahead of the Chinese New Year, and Malaysia's improved trade dealing with China.

MIDF believed Malaysia's recent trade deals with China would reinforce the CPO demand from the second largest economy next year.

Malaysia had earlier signed a memorandum of understanding with the China Chamber of Commerce of Foodstuff and Native Produce to increase purchases of palm oil by an additional 1.9 million tonnes between 2019 till 2023.

It has also partnered with China's Bohai Commodity Exchange with the aim of supplying about 1.5 million tonnes of CPO to China by 2020./.