MARKET DEVELOPMENT
Slower Recovery for Plantation Sector on Lower Sept Figures
Slower Recovery for Plantation Sector on Lower Sept Figures
11/10/2013 (Borneo Post) - The plantation sector is not expected to have a strong recovery soon as crude palm oil production in September expanded less than the market expected coupled with high inventories which supressed the price of crude palm oil (CPO).
JF Apex Securities Bhd in a report said the just-released palm oil statistics by Malaysian Palm Oil Board (MPOB) for September 2013 showed that CPO production grew 10.2 per cent last month compared with market expectations of 15 per cent.
The research firm’s analyst Jessica Low said, “CPO production in September gathered momentum by growing at 10.2 per cent month-on-month after posted a modest growth of 3.6 per cent in August.
“However, CPO production in September expanded less than market expectations of 15 per cent as shown by survey. We are not surprised at the high CPO production in September as the production has entered its high cycle.
“Looking ahead, we expect CPO production to stay robust in October and November amid peak harvesting season,” said Low.
Meanwhile, Alliance Research Sdn Bhd (Alliance Research) said palm oil production for the month of September was 1.91 metric tonnes, up 10.2 per cent month-on-month but down 4.2 per cent year-on-year.
It said the month-on-month jump in production was largely within estimates given the annual peak production cycle occuring from September onwards.
Alliance Research anticipated that CPO prices to stay within RM2,500 per metric tonne in the near term.
In addition, it also estimated that the average selling price for CPO to move in the range of RM2,500 per metric tonne in 2014 as there is no clear drivers for the prices to move upward.
Likewise, it noted that if production in the fourth quarter of 2013 is weaker than expected, there would be more impetus for CPO prices to stage a strong recovery.
On the other hand, Low said palm oil demand was strong in September as MPOB reported palm oil export growth of 5.16 per cent month-on-month.
Citing MPOB data, Low added the improved palm oil export in September was largely due to higher palm oil export to India, Pakistan and the US which offset the lower palm oil export to China and the European market.
She observed that the higher palm oil export to India was due to the stock-up activity ahead of the Deepavali celebration in November and the recovery of the Rupee.
Although demand for palm oil is expected to go up, both research firms, JF Apex Securities and Alliance Research are maintaining their neutral recommendation for the sector at this juncture pending positive newsflow which could boost CPO price.
JF Apex Securities Bhd in a report said the just-released palm oil statistics by Malaysian Palm Oil Board (MPOB) for September 2013 showed that CPO production grew 10.2 per cent last month compared with market expectations of 15 per cent.
The research firm’s analyst Jessica Low said, “CPO production in September gathered momentum by growing at 10.2 per cent month-on-month after posted a modest growth of 3.6 per cent in August.
“However, CPO production in September expanded less than market expectations of 15 per cent as shown by survey. We are not surprised at the high CPO production in September as the production has entered its high cycle.
“Looking ahead, we expect CPO production to stay robust in October and November amid peak harvesting season,” said Low.
Meanwhile, Alliance Research Sdn Bhd (Alliance Research) said palm oil production for the month of September was 1.91 metric tonnes, up 10.2 per cent month-on-month but down 4.2 per cent year-on-year.
It said the month-on-month jump in production was largely within estimates given the annual peak production cycle occuring from September onwards.
Alliance Research anticipated that CPO prices to stay within RM2,500 per metric tonne in the near term.
In addition, it also estimated that the average selling price for CPO to move in the range of RM2,500 per metric tonne in 2014 as there is no clear drivers for the prices to move upward.
Likewise, it noted that if production in the fourth quarter of 2013 is weaker than expected, there would be more impetus for CPO prices to stage a strong recovery.
On the other hand, Low said palm oil demand was strong in September as MPOB reported palm oil export growth of 5.16 per cent month-on-month.
Citing MPOB data, Low added the improved palm oil export in September was largely due to higher palm oil export to India, Pakistan and the US which offset the lower palm oil export to China and the European market.
She observed that the higher palm oil export to India was due to the stock-up activity ahead of the Deepavali celebration in November and the recovery of the Rupee.
Although demand for palm oil is expected to go up, both research firms, JF Apex Securities and Alliance Research are maintaining their neutral recommendation for the sector at this juncture pending positive newsflow which could boost CPO price.