12/10/2012 (Bernama) - Two research houses have maintained their Neutral call on the plantation sector, saying that the recent decline in Crude Palm Oil (CPO) prices has been exaggerated.

Alliance Research in its research note on Tuesday said it expected CPO stocks to ease in October and November when the festive season demands kick in.

"However, given our continued view that demand will be lower year-on-year, we do not expect the rebound in CPO prices to be strong and prices will likely not surpass the RM3,000 metric tonne levels over the fourth quarter of 2012," it said.

It said the CPO-soybean oil discount was high at US$329 per metric tonne and this should continue to narrow as CPO prices recover and soybean prices trend down further from historical highs.

However, Hong Leong Investment Bank said the sharp decline in global economy will hurt demand for edible oils including CPO, and result in a low CPO price environment.