Palm Oil 02 (Jun 14 - Dec 26)

[winston]

Malaysian palm oil prices suffers for fifth session of losses on stronger ringgit

Malaysian shipments in March rose by 22.9 percent from a month earlier as sellers rushed to export crude palm oil ahead of a 5 percent export duty starting in April.

Source: The Star

http://www.thestar.com.my/business/busi ... r-ringgit/

[winston]

Sell on strength

We cut CY16F Malaysia/Indonesia palm oil output by 4%/3%; tweaked CY16F/17F prices by +6%/-3%

Release of China’s vegetable oil reserves denting palm oil demand – watch out for lower 4Q16 prices

CY16F earnings revised by -10% to +18%; TPs adjusted by -11% to +3%

CY17F supply recovery is bearish for CPO prices.

SELL calls: FGV, GENP, IOI, SIME;

BUY call: WIL

Source: DBS

[winston]

Double whammy for oil palm planters in Indonesia

BY HANIM ADNAN

“Many of these planters strictly adhered to the zero burning policy in their plantation management in recent years.

“However, in some incidences the fire actually started outside the boundaries of their plantations but later seen spreading back into these plantations.

Source: The Star

http://www.thestar.com.my/business/busi ... indonesia/

[winston]

What I Learned About Human Rights, Heart Disease, and the FARC While Making a Film About Palm Oil

By Michael Dorgan

Source: Epoch Times

http://www.theepochtimes.com/n3/2166314 ... -palm-oil/

[winston]

Plantations sector: Demand would have to be robust next year

Thus far, palm oil prices have recorded strong gains YTD on declining production and tightening inventories post El Nino, in addition to a depreciating Ringgit.

The consensus view expects CPO production to rebound next year, and at this juncture, weather conditions are forecasted to be supportive for harvesting.

All considered, we are NEUTRAL on the plantations sector.

As of Oct-16, OCBC Treasury Research and Strategy expects the seasonally lower palm oil production in Malaysia and Indonesia to support prices above MYR2,700/MT into early 2017, with a MYR2,900/MT target for 1Q17.

But given signs of ample supplies and some uncertainty over demand, OCBC Treasury estimates that CPO price may correct to MYR2,650/MT for 4Q17.

Source: OCBC

[winston]

Last call to ‘buy’ these plantation stocks on the CPO price rally

By Michelle Zhu

SINGAPORE (Jan 31): UOB Kay Hian is maintaining its “overweight” call on the planation sector within Singapore and the region, noting that crude palm oil (CPO) prices are likely to stay firm throughout 1H17 as supply is still relatively tight.

“We see weaker CPO prices in 2H17 vs 1H17, but maintain our price expectation of RM2,600 ($834) for 2017. Investors should sell on strength when share prices trend higher as companies are expected to report good 4Q16 and 1Q17 earnings,” says UOB’s regional research team in a recent report.

It is also expecting CPO demand to improve marginally this year, driven by stable demand on Indonesia’s biodiesel mandate; the rolling out of the B10 biodiesel programme in Malaysia; as well as stable demand from India and China.

“If the production recovery comes in weaker than expectations due to weaker yield recovery, this will be positive for CPO prices,” state the team.

“Meanwhile, rising crude oil prices could make biodiesel blend more financially feasible as fewer subsidies are needed especially when CPO prices weaken in 2H17. This will increase demand for biodiesel and act as a support to CPO prices. Moreover, higher crude oil prices are positive for palm oil prices,” it adds.

According to UOB, the price differential between palm oil and crude oil is wide, with prices for the former coming in about US$330/tonne above the latter.

The team’s top “buy” picks for the season therefore focus on companies with younger tree age profiles and efficient management, as it believes this translates to strong production recovery and hence higher production growth and earnings.

These include Bumitama Agri and First Resources in Singapore which have both been given “buy” ratings at target prices of 78.5 and $1.98 respectively.

“We like Bumitama Agri for its stronger earnings growth, driven by positive production growth and a high leverage to CPO prices. Share price has lagged behind peers and provides the highest upside to our target price,” elaborates the team.

On the other hand, UOB analysts speculate that First Resources’ share price could rally above their target price to reflect the current high CPO prices and expected strong 4Q16 earnings which are to be reported on Feb 17.

The group’s fresh fruit bunches (FFB) production rate is also expected to grow y-o-y by 17.9% and 16.3% in 2017 and 2018 respectively.

Shares of Bumitama Agri and First Resources closed at 80 cents and $1.93 respectively.

Source: The Edge

http://smr.theedgemarkets.com/article/l ... rice-rally

[winston]

Rising output to weigh on CPO price outlook

BY S. PUSPADEVI

PETALING JAYA: Rising production, which is projected to linger to the third quarter of the year, will weigh on crude palm oil (CPO) price outlook.

CPO prices has been on a downward trend since January this year. It has dropped 22.26% to close at RM2,459 on Friday.

While analysts expect the production recovery this year given that the El Nino phenomenon had impacted production in the previous two years, Oversea-Chinese Banking Corp Ltd (OCBC) economist Barnabas Gan said other concerns overshadowing CPO prices include low oil prices and higher oilseed production.

OCBC estimated that Malaysia’s CPO production will rise by 15% this year.

CPO production had gained for six consecutive months into May, averaged 18.8% in five months of 2017. This tracks the strongest growth since 2008 over the same period.

Global oilseed production has been healthy underpinned by higher soybean production in Brazil and Argentina, according to US Department of Agriculture.

Global stocks rose by 3.1 million tonnes to 93.2 million tonnes during the same period.

“Soybean, a key substitute to palm oil, is projected to grow higher given strong yields in recently harvested areas, especially in Rio Grande, Brazil,” he said.

Considering the above factors, OCBC downgraded CPO price outlook to RM2,250 per tonne at year-end from May’s forecast of RM2,650.

Source: The Star

http://www.thestar.com.my/business/busi ... bR7ETYl.99

[winston]

Malaysian palm oil price sees sharpest fall in 3-weeks on weaker related oils

The palm oil September contract may slide more to 2,551 ringgit per tonne, according to Reuters market analyst for commodities and energy technicals Wang Tao.

Source: The Star

http://www.thestar.com.my/business/busi ... cDrKeIV.99

[winston]

Malaysian palm oil price dips on firmer ringgit

Malaysian palm oil futures slipped on Monday as a stronger ringgit and expectations for higher production offset data showing an increase in export shipments.

Source: The Star

http://www.thestar.com.my/business/busi ... 6Q41XoV.99

[winston]

A competitive comparison of the 6 largest plantation companies in Malaysia

By Stanley Lim

Within the group of six, companies like KLK and United Plantations have shown to be able to generate much higher return on equity for shareholders while providing a reasonable yield as well.

Source: Fifth Person

http://fifthperson.com/a-competitive-co ... -malaysia/