Palm Oil 02 (Jun 14 - Dec 26)

[winston]

Easing Sept stockpile pressure
Positive surprise on Sept exports and stockpile

MPOB’s Sept 2021 stockpile fell MoM to 1.75mt (-7% MoM, +1% YoY), below street estimates of 1.87mt.

Key surprise was the strong rebound in exports while Sept output remained relatively weak.

CPO price will stay relatively lofty till 1Q22 on supply concerns although it may not sustain at MYR5,000/t.

Stay POSITIVE on the sector. We downgrade FR and TAH to HOLDs (from BUYs) given limited upside following recent share price performance.

Preferred BUYs are KLK, SOP and BPLANT.

Source: Maybank

https://www.kelive.com/KimEng/servlet/P ... &rid=55823

[behappyalways]

Edible Oil Prices Hit Record High As Food Inflation Treat Soars
https://www.zerohedge.com/commodities/e ... reat-soars

[behappyalways]

Record-High Global Food Prices Imminent As Edible Oil Soars
https://www.zerohedge.com/commodities/r ... -oil-soars

[winston]

We are turning more NEUTRAL
Time to take some profit

We downgrade our sector call to NEUTRAL (from POSITIVE) given limited upside to our TPs following recent share price outperformance.

However, a protracted Russian-Ukraine war into the spring planting season and/or any agri-related sanctions on Russia or by Russia may just keep CPO ASP lofty for a bit longer.

Else, we believe CPO ASP may likely peak in 1Q22 as PO supply is expected to recover from 2Q22 and Indonesia will gradually lift export restriction post Lebaran.

We downgrade GENP, SOP, TSH, and BPLANT to HOLD (from BUY) and cut FR to SELL (from HOLD).

We upgrade TAH to BUY (from HOLD). Our BUYs are KLK, TAH and BAL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/254902.pdf

[winston]

MPOB: CPO price has peaked, projected to decline in near term

by Shazni Ong

The board had expected CPO price to hover around RM7,000 a tonne, owing to a recent Indonesian policy that mandates palm oil producers to sell a fifth of their output to domestic refiners at fixed prices but the Russia-Ukraine crisis had boosted CPO price to break the RM8,000 level.

"I doubt in the long term but at least above RM5,000 for at least the first half of the year" .

Consumers have rushed to source for CPO following a shortfall in sunflower oil because of the Russia-Ukraine crisis.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... -near-term

[winston]

Indonesia imposes further export curbs

MY & ID CPO price gap may widen even further

3M FCPO jumped 10% to MYR7,074/t yesterday following ID government’s decision to raise the domestic market obligation (DMO) to 30% (from 20%).

While this is positive for CPO price in the short term due to further export curbs by ID, the high CPO price will hasten demand rationing.

Meanwhile, the relatively more MY-centric growers such as IOI, SOP, BPLANT, TAH, THP,
HAPL, and FGV are again clear winners of this additional export curbs.

Preferred BUYs remain with KLK, TAH and BAL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/255266.pdf

[behappyalways]

Cooking Oil Shortage Sparks Panic Buying In Indonesia
https://www.zerohedge.com/commodities/c ... -indonesia

[winston]

Palm oil extends four-day drop to 13% on Brent crude slump

by Anuradha Raghu & Jasmine Ng

Talk of Indonesia approving more export permits and expectations of rising Malaysian output are pressuring prices.

Palm oil is used in thousands of products from margarine to lipstick and hand sanitizer.

Record of RM7,268.

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... rude-slump

[winston]

not vested

Plantation – Regional
Flip-flopping On DMO Policy

The Indonesian government announced the demolishment of the DMO policy yesterday,
along with an increase in the CPO export levy in order to subsidise household
unbranded cooking oil.

In the past, when Indonesia increased exports levy, CPO prices rose on the excuse that higher prices would compensate for the higher levy.

But with the weak demand sentiment now, CPO prices may not see a positive reaction. This would burden Indonesian upstream players as they would need to bear the export levy. Maintain MARKET WEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... 5d69298e5a

[winston]

not vested

A more realistic solution but at the expense of growers?
Maintain NEUTRAL on the sector

If the proposal to raise Indonesia’s CPO export levy materialize, Indonesian based upstream growers’ CPO net receipts will probably be worse off whenever global prices exceed USD1,000/t.

Using 16 Mar as an illustration, we estimate their CPO ASP would be lower by USD158/t under the new proposal.

As details remain sketchy, we make no changes to our forecasts for now.

Meanwhile, removing the export curbs may pressure CPO prices in the near term. Preferred BUYs: KLK, TAH & BAL.

Source: Maybank

https://www.kelive.com/KimEng/servlet/P ... &rid=56844