CIMB Research maintains Neutral on plantations
KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral sector rating for plantations and continues to prefer planters that offer strong output growth prospects and/or attractive valuations.
It said on Tuesday a survey conducted by its futures team survey of 20 Malaysian planters revealed that palm oil output was marginally lower in October.
Output fell by an estimated 0.7% on-month to 1.88 million tonnes due to weaker yields from Peninsular Malaysia estates. Palm oil exports fell by 2% on-month due to lower demand from India.
“Overall, we project Malaysian palm oil inventory to rise by 3% on-month to 2.15 million tonnes in October,” it said.
The CPO futures price has recently breached the top end of our near-term price range of RM2,300 per tonne due to higher soybean oil prices, concerns of dry weather in some key planting areas in Indonesia and the lagged impact of drought in Peninsular Malaysia on palm oil output.
“We maintain our Neutral sector rating and preference for First Resources, Astra Agro and SIMP,” it said.
CIMB Research said CPO production was marginally weaker in October. This could be due to potential tree stress from the drought experienced in Peninsular Malaysia in 1Q14.
The survey revealed that CPO production in October could fall by 0.7% on-month to 1.88 million tonnes.
Peninsular Malaysia estates posted the biggest decline in CPO production (-5% to -6% on-month), followed by Sabah (-9% to +5% on-month) and Sarawak (-1.5% to +8% on-month).
Malaysian palm oil exports fell 2% on-month in October, based on the cargo surveyor reports by SGS and Intertek.
This was due to lower exports to India, following the strong purchase in the previous month.
“We have assumed domestic consumption of 271,000 tonnes and imports of 45,000 tonnes in Oct. Based on the above assumptions, we project that palm oil stocks at end-Oct will rise by 3% on-month to 2.15 mil tonnes,” it said.
CIMB Research said spot CPO prices have risen by 4% in the past month to hit a three-month high of RM2,260 per tonne due to the higher soybean/soybean oil prices (+7% due to low near-term inventories), restocking activities for CPO (stronger demand from China) and concerns of weaker output from Indonesia due to lower rainfall.
“This has led to CPO prices surpassing the upper end of our trading price range of RM2,300 per tonne.
“In view of this and recent information we gathered from the POTS conference, we have raised our CPO price trading range to RM2,000-2,500 per tonne.
“The average CPO price achieved in 10 month 2014 (RM2,415 per tonne) remains in line with our full-year projection of RM2,390 per tonne. We maintain our Neutral sector rating and continue to prefer planters that offer strong output growth prospects and/or attractive valuations,” it said.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral sector rating for plantations and continues to prefer planters that offer strong output growth prospects and/or attractive valuations.
It said on Tuesday a survey conducted by its futures team survey of 20 Malaysian planters revealed that palm oil output was marginally lower in October.
Output fell by an estimated 0.7% on-month to 1.88 million tonnes due to weaker yields from Peninsular Malaysia estates. Palm oil exports fell by 2% on-month due to lower demand from India.
“Overall, we project Malaysian palm oil inventory to rise by 3% on-month to 2.15 million tonnes in October,” it said.
The CPO futures price has recently breached the top end of our near-term price range of RM2,300 per tonne due to higher soybean oil prices, concerns of dry weather in some key planting areas in Indonesia and the lagged impact of drought in Peninsular Malaysia on palm oil output.
“We maintain our Neutral sector rating and preference for First Resources, Astra Agro and SIMP,” it said.
CIMB Research said CPO production was marginally weaker in October. This could be due to potential tree stress from the drought experienced in Peninsular Malaysia in 1Q14.
The survey revealed that CPO production in October could fall by 0.7% on-month to 1.88 million tonnes.
Peninsular Malaysia estates posted the biggest decline in CPO production (-5% to -6% on-month), followed by Sabah (-9% to +5% on-month) and Sarawak (-1.5% to +8% on-month).
Malaysian palm oil exports fell 2% on-month in October, based on the cargo surveyor reports by SGS and Intertek.
This was due to lower exports to India, following the strong purchase in the previous month.
“We have assumed domestic consumption of 271,000 tonnes and imports of 45,000 tonnes in Oct. Based on the above assumptions, we project that palm oil stocks at end-Oct will rise by 3% on-month to 2.15 mil tonnes,” it said.
CIMB Research said spot CPO prices have risen by 4% in the past month to hit a three-month high of RM2,260 per tonne due to the higher soybean/soybean oil prices (+7% due to low near-term inventories), restocking activities for CPO (stronger demand from China) and concerns of weaker output from Indonesia due to lower rainfall.
“This has led to CPO prices surpassing the upper end of our trading price range of RM2,300 per tonne.
“In view of this and recent information we gathered from the POTS conference, we have raised our CPO price trading range to RM2,000-2,500 per tonne.
“The average CPO price achieved in 10 month 2014 (RM2,415 per tonne) remains in line with our full-year projection of RM2,390 per tonne. We maintain our Neutral sector rating and continue to prefer planters that offer strong output growth prospects and/or attractive valuations,” it said.
http://www.thestar.com.my
