11/10/2012 (The Star) - RHB Research Institute believes it is possible for share prices to fall a little further to reflect a larger fall in crude palm oil (CPO) prices before rebounding.

The research house said on Thursday CPO prices had fallen from RM2,900-RM3,000 a tonne in early September to RM2,200-RM2,300 a tonne currently.

"We expect prices to remain weak in the next one to two months and only start to pick up moderately once the peak production period is over in November and December, which could see prices rising back to closer to the RM3,000 tonne level," it said.

RHB Research said should prices stay at current levels for the rest of the year, it estimated the average price for 2012 may turn out to be RM2,800-RM2,900 per tonne instead. It left its 2013CPO price forecasts of RM2,900 tonne unchanged.

"Despite the 25% fall in CPO prices since early-Sep, the plantation index has only fallen by 5.6%. While we concur that CPO prices will bounce back towards the year-end, we believe that share prices of the plantation stocks we cover are currently only reflecting CPO prices of RM2,700-RM3,000 a tonne," it said.

The research house pointed out it was possible for share prices to fall a little further to reflect a larger fall in CPO prices before rebounding. It maintained its Neutral call on the sector.