Palm Oil 02 (Jun 14 - Dec 26)

[behappyalways]

Indonesia Lifts Palm Oil Export Ban As Supply Improves
https://www.zerohedge.com/commodities/i ... y-improves

[winston]

Palm oil

Jakarta’s flip flop over palm oil exports — it banned exports in April, lifted it three weeks later and reimposed a domestic sales quota — will help Malaysia-listed planters with lower exposure to Indonesia such as Kuala Lumpur Kepong Bhd KLK), said Bloomberg Intelligence analyst Alvin Tai.

Meanwhile, top agricultural traders including Wilmar as well as US-listed Archer-Daniels-Midland Co and Bunge Ltd, tend to benefit when there are price dislocations and uncertainty in the market, said Tellimer analyst Nirgunan Tiruchelvam.

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... tectionism

[winston]

Plantation stocks dip as planters flag losses in earnings by 5-10% from labour shortages

by Surin Murugiah

It said even if there are fresh fruit bunches (FFB) on the trees, they are not being harvested or are not harvested within the specified norm of a 12 to 15 days round.

Some areas are even taking up to 35 to 40 days to render the FFB to be overripe or rotten, it said.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... e=malaysia

[winston]

Plantation – Regional

Prices To Ease, But Will Remain At Supportive Levels And Deliver Good Profit Margins

Mr Dorab Mistry of Godrej International remains bearish on vegoil prices, especially
towards end-22 as there would be higher supplies of vegoil oil, while demand may not
catch up due to the weak economic outlook.

But CPO prices would still remain buoyant as current supply tightness can ease only if South America delivers bumper soybean crops in the coming season.

There is a risk of a major price correction if the UkraineRussia war comes to an end. Maintain MARKET WEIGHT. BUY HAPL MK and IOI MK.

Source: UOBKH

https://research.uobkayhian.com/content ... 90f63eaf7b

[behappyalways]

Malaysian palm oil plantations feel the pain of pandemic-related restrictions on foreign workers
https://m.youtube.com/watch?v=R9HMA2pbcr8

[winston]

Fertiliser and worker shortages to curb Malaysian palm oil output

by Anuradha Raghu

The price of fertilisers, which make up about 40% of palm oil’s production cost, surged over the last year on logistics snarl-ups and then the Russian invasion of Ukraine. Prices have retreated over the last few months, but many growers struggled to buy enough earlier in the season, curbing yields.

The shortage has worsened to around 120,000 workers, compared with 36,000 before the Covid-19 pandemic,

Datuk Zuraida Kamaruddin said last month that palm oil production would rebound to 23 million to 25 million tons this year, up from a five-year low of 18.1 million tons in 2021. The Malaysian Palm Oil Association, which mainly represents bigger listed companies, sees even lower output of 18.5 million to 18.7 million tons.

“Even if the workers come, I think we will only start seeing additional production by September”.

“Even if foreign workers come in now, it will take one to two years to rehabilitate, plus there’s the high cost of labour and fertilisers” .

Source: Bloomberg

https://www.theedgemarkets.com/node/625273

[winston]

Are days of ‘super-high’ CPO prices gone?

By GANESHWARAN KANA

Some experts are predicting even cheaper CPO prices in the second half of 2022 (2H22), although on a full-year basis, the average CPO price is forecast to be above the RM5,000-per-tonne mark.

The fact that the prices of other rival edible oils have also been falling weighed down the CPO performance.

“Palm oil producers with estates in Indonesia are likely to see weak second-quarter earnings, as palm oil sales were disrupted by the export ban, leading to likely higher inventory as at end-June 2022.

Source: The Star

https://www.thestar.com.my/business/bus ... rices-gone

[winston]

Too early to turn bearish on plantation sector, says HLIB

by Surin Murugiah

It is still too early to turn bearish on sector, as crop recovery remains uncertain at this juncture, as:-
(i) palm output recovery in Malaysia may disappoint and
(ii) La Niña may return for a third year in a row by Sep/Oct 2022.

Crude palm oil (CPO) price discount to soybean oil has recently widened to US$400/mt and this will likely spur buying interest.

“For exposure, we prefer integrated players such as Kuala Lumpur Kepong Bhd (BUY; TP: RM32.43) and IOI Corp Bhd (BUY; TP: RM5.07) over purer upstream players, as integrated players tend to deliver more stable financial performance amidst volatile palm product price trend”.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... -says-hlib

[winston]

Sharp drop in CPO price is always disruptive

Watch out for default or deferment of deliveries

The recent sharp decline in CPO price can be rather disruptive to business.

There is also rising risk of default by buyers, or buyers seeking to defer some shipments of higher priced palm oil locked in earlier.

Positively, the current CPO ASP is still above the industry’s average operating cost of
production estimated for FY22E at <MYR2,500/t. But the situation in Indonesia is worrisome (although temporary) as domestic net CPO ASP was last quoted at IDR8,000/kg (or MYR2,374/t on 24 June).

We maintain our NEUTRAL call on the sector. Preferred BUYs: KLK, IOI and BAL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/267635.pdf

[winston]

Plantation – Regional
Near-term Palm Oil Prices To Rebound But Unlikely To Go Back To Previous Peak

Thomas Mielke of Oil World is expecting palm oil prices to recover as the recent 30%
correction is not justifiable with supply still tight and at these prices, demand is
returning as well with better demand from the biofuel segment.

However, he expects prices to be lower in 2022/23 on the back of a stronger supply but will still be at a supportive level as conventional demand is returning from both the food and fuel sectors.

Maintain MARKET WEIGHT. BUY HAPL MK, IOI MK and TAPG IJ.

Source: UOBKH

https://research.uobkayhian.com/content ... 284075c662