27/07/2012 (Bernama) - Alliance Research has maintained its "overweight" call on the plantation sector with continued expectation of a developing El Nino and possible supply shortage in the soybean market.

It said the EL Nino, a climate pattern that brings about dry and hot weather, is which expected to develop from September onwards, and that it would be the key catalyst for crude palm oil (CPO) prices in the second half of this year.

The research house also said recent reports of rainfall in the US Midwest which have eased soybean prices mildly, will reaffirm its bullish call on the sector.

"Further to that, continued demand for CPO is expected as some price sensitive markets such as India and Pakistan turn to more CPO, instead of the more expensive soybean oil," it said in a research note today.

Alliance Research has maintained the average price for the commodity at RM3,200 per metric tonne for this year and at RM3,300/MT next year.