|27.02.2009 - iFAST Research says Malaysian commodities not promising in 2009 despite outperforming in January this year|
|From Komfie Manalo, Opalesque Asia: A study made by iFAST Research Team and published on Fundsupermart.com in January said that the Malaysian commodity market was not promising in 2009. The study entitled: “Malaysia Commodities Updates – A Cyclical Downturn,” said that in the short to medium term, Malaysian commodities depended on the magnitude and duration of the economic downturn.
Without a hint of convergence to steadiness, it is hard to anticipate when the commodity market will start to recover. The future price movements of both crude oil and palm oil are reliant on various factors, the study said. Besides the demand and supply factors, substitution effect and speculation on commodities also contribute to price movements.
The researchers said they were not able to predict when the down cycles of both commodities prices would come to an end. Both crude oil and palm oil are currently trading at a level below their cost of production.
Impact of lower palm oil prices on the Malaysian economy
Sluggish outlook for palm oil
Supply is also affected because of the rising cost of production. Some plantations have stopped cultivating or discontinued fertilizing activities.
Impact of oil prices on the Malaysian economy
High oil prices hurt the consumer because of high inflationary pressure. Malaysia experienced an all-time-high inflation rate of 8.5% in July and August 2008 after the government raised the petrol price by a whopping 41% to $0.72 per liter.
Crude oil outlook
For the coming 12 months, the weaker demand will be the dominant factor for lower crude oil prices apart from the ability of OPEC to restrain supply. In the short term, iFAST expects oil prices to remain at depressed levels but added that such low prices were not sustainable for the medium to long term.
Malaysia commodities lose out in 2008