MARKET DEVELOPMENT
Analysts Expect CPO Stocks To Increase In August
Analysts Expect CPO Stocks To Increase In August
13/08/2014 (Bernama) - Analysts expect crude palm oil (CPO) stocks in August to increase on the back of production recovery.
The long-term CPO price uptrend remained intact due to sustainable demand seen from the sector despite the palm oil exports being affected by China's demand, said Kenanga Research in a note Tuesday.
"We reiterate a 'neutral' call on the sector with both our calendar year 2014-2015 average CPO price forecast of RM2,500 per metric tonne unchanged.
"However, ample production of competing soyabean oil is limiting CPO prices' upside," it said.
On production, Kenanga Research said it expected August 2014 inventory to increase by five per cent to 1.77 million metric tonnes, assuming four per cent production growth month-on-month.
"On the demand side, we expect flattish export growth as better-than-expected demand from Northern Hemisphere would be neutralised by the China crackdown on commodity financing trade," it said.
Kenanga Research's favoured stocks were Sime Darby with an 'outperform' call and a target price of RM10.35.
Meanwhile HLIB Research said CPO stockpile in August would likely climb further from July's level mainly on the back of CPO output recovery and the narrow CPO prices discount against soyabean oil.
"We are maintaining our CPO price projection of RM2,700 per metric tonne for 2014-2015," it said, adding that its favoured stock was Genting Plantation with a 'buy' call and a target price of RM12.16.
The long-term CPO price uptrend remained intact due to sustainable demand seen from the sector despite the palm oil exports being affected by China's demand, said Kenanga Research in a note Tuesday.
"We reiterate a 'neutral' call on the sector with both our calendar year 2014-2015 average CPO price forecast of RM2,500 per metric tonne unchanged.
"However, ample production of competing soyabean oil is limiting CPO prices' upside," it said.
On production, Kenanga Research said it expected August 2014 inventory to increase by five per cent to 1.77 million metric tonnes, assuming four per cent production growth month-on-month.
"On the demand side, we expect flattish export growth as better-than-expected demand from Northern Hemisphere would be neutralised by the China crackdown on commodity financing trade," it said.
Kenanga Research's favoured stocks were Sime Darby with an 'outperform' call and a target price of RM10.35.
Meanwhile HLIB Research said CPO stockpile in August would likely climb further from July's level mainly on the back of CPO output recovery and the narrow CPO prices discount against soyabean oil.
"We are maintaining our CPO price projection of RM2,700 per metric tonne for 2014-2015," it said, adding that its favoured stock was Genting Plantation with a 'buy' call and a target price of RM12.16.