MARKET DEVELOPMENT
Plantation Stocks Down on Weaker Outlook
Plantation Stocks Down on Weaker Outlook
17/09/2014 (The Star) - Plantation stocks were weaker in early trade on Wednesday as analysts remained Underweight on the sector due to the weak demand and price outlook.
At 9.40am, KL Kepong fell 36 sen to RM21.16 and United Plantations 16 sen to RM27.58.
Sime Darby fell 10 sen to RM9.05 and Genting Plantations four sen to RM9.96.
In a note on Wednesday, Hong Leong Research said while there is still possibility that an El Nino episode will likely develop by end-14, it believes this will unlikely bring palm oil prices significantly higher in the near term, given that the potential El Nino episode will likely be a weak one with limited impact on rainfall and temperature.
"More importantly, several other bearish factors (including high production for other competitive crops, falling crude oil prices and the absence of seasonal demand) will likely cap further near term significant upside of palm oil prices," it said.
However, the occurrence of a weak El Nino will not have a significant impact on rainfall and temperature throughout Malaysia.
However Sabah and the northern part of Sarawak may feel the impact between end-14 and mid-2015.
Despite the issue, the research house noted that several action plans could be taken to moderate the effect of El Nino on oil palm, including water conservation in field, delaying replanting during drought season, and the use of mulching to protect the palms from expected severe drought season.
At 9.40am, KL Kepong fell 36 sen to RM21.16 and United Plantations 16 sen to RM27.58.
Sime Darby fell 10 sen to RM9.05 and Genting Plantations four sen to RM9.96.
In a note on Wednesday, Hong Leong Research said while there is still possibility that an El Nino episode will likely develop by end-14, it believes this will unlikely bring palm oil prices significantly higher in the near term, given that the potential El Nino episode will likely be a weak one with limited impact on rainfall and temperature.
"More importantly, several other bearish factors (including high production for other competitive crops, falling crude oil prices and the absence of seasonal demand) will likely cap further near term significant upside of palm oil prices," it said.
However, the occurrence of a weak El Nino will not have a significant impact on rainfall and temperature throughout Malaysia.
However Sabah and the northern part of Sarawak may feel the impact between end-14 and mid-2015.
Despite the issue, the research house noted that several action plans could be taken to moderate the effect of El Nino on oil palm, including water conservation in field, delaying replanting during drought season, and the use of mulching to protect the palms from expected severe drought season.