16/04/2012 (The Star) - OSK Research believes a correction in the crude palm oil (CPO) price has begun and production in the months ahead will be stronger.

It said on Monday that a subsequent price lull should take place as early strong demand is matched by ample supply.

“We may need to upgrade our CPO price assumption in the months ahead. Smaller growth stocks have been largely the sector outperformers, while the performance of larger stocks (which are the sector's proxy) has been flat.

“We believe this will continue to be the case until the CPO price correction is over and hence, quality growth stocks should continue to be bought. Maintain Neutral on sector,” it said.

CPO for third month delivery fell RM19 to RM3,478 per tonne at midday.

OSK Research said early data suggest that Indonesia's production continued to be strong this year, while Malaysia's production was exiting its seasonal trough a little earlier than expected. “We also learnt during our visit to South Kalimantan that production in the months ahead will be strong judging from the fresh fruit bunches formation,” it said.