Plantations Weekly Review: 17th – 23rd November 2008
• Continued weakness
CPO prices, weakened again over the week with the last reported MPOB daily price at RM1420 per MT (last week closed at RM1440.50). Prices continue to correlate strongly with crude oil prices which fell below US$50 during the week and soy prices which saw weakness as well. Looking into share prices of plantation stocks, IOI saw some selling pressure during the week and declined 5.8%, along with Kim Loong and TSH which fell 5.6% and 6.3% respectively. It looks to us like another choppy week of trading ahead.
• India places 20% duties on soy oil imports
In an attempt to protect its own oilseed market, India last week announced a 20% import duty on soybean oil after scrapping duties back in March to bring down food prices. We see minimal impact from this on palm oil
imports as 85% of India’s edible oil imports are actually palm oil while the remaining soy. However, we might also see duties on palm oil enforced next as this have been talked about for some time in the market.
• News and Views
During the week, SGS Cargo Surveyors reported an 18% increase in exports so far in November while MPOB reported that the occurrence of defaults on contracts has quietened down. Besides this, MPOB expects
the seasonal down cycle to hit soon especially with the occurrence of flooding at year end. Besides this, there are expectations that imports by China may increase towards to year end as pre stocking for the Lunar
• Maintain Neutral on the sector for now. Sime 1Q09 results
expected on the 28th and Asiatic on the 25th of November.
1-15th November export numbers up 18%
Cargo surveyor SGS reported that palm oil exports are up 18% MoM so far and shipments have been above market expectations. Major importers recorded by the Group are the EU, China and followed by Pakistan. Exports to Pakistan, according to the report, grew by 167% if compared MoM while exports to Egypt also saw a marked increase. This is good news for November MPOB data of which we may finally start to see a decline in inventories. Stock prices caved under selling pressure as CPO prices continued to slide and negative
news from the US permeated into markets over the week. We do expect such a condition to continue over coming weeks.
Entry filed under: Business, Finance, Stock Market. Tags: 17th – 23rd November 2008, Asiatic, CPO prices, crude oil prices, IOI, Kim Loong, Lunar, MPOB daily price, plantations, SGS Cargo Surveyors, soy oil, TSH, weekly review.