05/12/2012 (Bernama) - The FTSE Bursa Malaysia KLCI fell 57.48 points, or 0.73 per cent to 7,867.81 as at 3.32 pm.

Plantation stocks such as United Plantations declined 50 sen to RM25, Sarawak Plantation dipped 15 sen to RM2.75 and IOI Corp fell 10 sen to RM4.83.

An analyst told Bernama that persistent worries over the global economy growth has dampened demand for crude palm oil (CPO) and higher stockpiles further affected sentiment.

However, Chinese demand ahead of Chinese New Year in February was expected to help limit the losses, he said.

Meanwhile, Kenanga Research has downgraded the plantation sector to 'underweight' from 'neutral' after 56 per cent of the planters under its coverage reported weaker-than-expected earnings for the third quarter this year.

"This was mainly caused by the lower-than-expected selling prices for CPO.

"Looking forward, we foresee a massive 'earnings cliff' in the coming earnings reporting season (February 2013) as the fourth quarter of calendar year 2012 earnings are poised to tumble at least 30 per cent year-on-year and 20 per cent quarter-on-quarter.

"In the near term, we expect November 2012 inventory to stay stubbornly high at 2.49 million metric tonnes and should keep the CPO price upside limited," it said in a research note today.

The research house also said the high CPO discount against soyabean oil may linger on for another three months as the Northern Hemisphere would enter its winter season soon.

It said as palm oil tended to solidify in cold temperatures, consumers may prefer to use rapeseed oil and soyabean oil despite its higher prices against palm oil.

Kenanga Research has reduced the average CPO price for calendar year 2012-2013 to RM2,900-RM2,850 per metric tonne from RM2,975-RM3,000 previously.