05/10/2012 (The Star) - Maybank KE Research is retaining its Neutral recommendation on the plantation sector, though it believes the sharp fall in third-month crude palm oil (CPO) futures is overdone.

The CPO price has plunged 21% since mid-September, or down 38% from the 2012 peak.

It said on Thursday the Neutral sector weighting was based on a 12-month investment horizon with valuations of its stock coverage based on 2013's expectations.

“However, as plantation stocks have yet to correct in tandem with recent CPO price fall, this raises the risk of possible panic selling on plantation stocks regionally as we expect CPO prices will likely range between RM2,300 to RM2,700 a tonne in October/November 2012 to boost demand.

“The good news is that at RM2,200 a tonne (Oct 3) for front-month futures, Malaysian-based refiners will regain their competitiveness as CPO price at less than US$750 a tonne attracts no export duty taxes in Indonesia,” Maybank KE Research said.