MARKET DEVELOPMENT
Amresearch Remains Positive on Plantation Sector
Amresearch Remains Positive on Plantation Sector
16/08/2013 (The Star) - AmResearch remains positive on Malaysia’s plantation sector for now and it has Buy recommendations on Genting Plantations, IJM Plantations, TSH Resources and KL Kepong.
It said on Thursday that the Malaysian Palm Oil Board’s (MPOB) palm oil statistics showed palm oil inventory in Malaysia inched up by 1.0% from 1.65mil tonnes in June 2013 to 1.66mil tonnes in July 2013. This was the first time after falling in the past six months.
“This was in line with consensus estimates of 1.65mil tonnes. The marginal rise in palm oil inventory was due to a rebound in production in July,” it explained.
AmResearch said palm oil output in Malaysia has recovered a month earlier than expected. In spite of weak exports in July, inventory levels did not surge. This was due to an increase in the domestic disappearance of palm oil.
“Domestic disappearance of palm oil climbed from an estimated 170,000 tonnes in June to 240,000 tonnes in July. B5 was implemented in Johor since end-July 2013. After Johor, B5 will be extended to the northern states of Peninsular Malaysia in October 2013. B5 will be implemented in the eastern states of Peninsular Malaysia with effect from January 2014 onwards,” it said.
Amresearch said it was reported that the implementation of B5 in the central and southern regions of Peninsular Malaysia would absorb about 149,630 tonnes of palm oil per year.
The MPOB data, it said, showed CPO inventory fell by 3.9% on-month in Peninsular Malaysia in July. In contrast, CPO inventory in Sarawak continued to rise in July, recording a on-month rise of 27.3%. Inventory of CPO in Sabah was relatively flat in July.
Average CPO price was RM2,325 a tonne in July 2013 versus RM2,387 in June. CPO price averaged RM2,317 a tonne in the first seven months of the year.
The research house said its CPO price assumption was RM2,400 a tonne for 2013.
The recovery in CPO production was led by Sarawak, which recorded a 26.8% MoM expansion in July. CPO output rose by 18.3% on-month in Peninsular Malaysia while Sabah registered a 12.8% improvement.
CPO production amounted to 10.1 million tonnes in the first seven months of the year, 5.9% higher than the 9.5mil tonnes recorded in the same period last year.
Amresearch said for the full year, industry experts are forecasting Malaysia's CPO output between 18.4 million and 19 million tonnes.
While exports of palm oil stagnated on-month in July but on a on-year basis, exports rose by 9.4% to 1.42 million tonnes in July.
It pointed out a a 12.3% increase in exports to China helped compensate for lower demand from Pakistan and Netherlands in July.
“Exports of biodiesel continued to climb. Biodiesel exports expanded by 71% MoM to 33,336 tonnes in July. Year-to-date, biodiesel exports amounted to 105,928 tonnes.
“We believe that Malaysian biodiesel producers are taking advantage of the provisional anti-dumping duties imposed by the European Union on the Indonesian companies,” added Amresearch.
It said on Thursday that the Malaysian Palm Oil Board’s (MPOB) palm oil statistics showed palm oil inventory in Malaysia inched up by 1.0% from 1.65mil tonnes in June 2013 to 1.66mil tonnes in July 2013. This was the first time after falling in the past six months.
“This was in line with consensus estimates of 1.65mil tonnes. The marginal rise in palm oil inventory was due to a rebound in production in July,” it explained.
AmResearch said palm oil output in Malaysia has recovered a month earlier than expected. In spite of weak exports in July, inventory levels did not surge. This was due to an increase in the domestic disappearance of palm oil.
“Domestic disappearance of palm oil climbed from an estimated 170,000 tonnes in June to 240,000 tonnes in July. B5 was implemented in Johor since end-July 2013. After Johor, B5 will be extended to the northern states of Peninsular Malaysia in October 2013. B5 will be implemented in the eastern states of Peninsular Malaysia with effect from January 2014 onwards,” it said.
Amresearch said it was reported that the implementation of B5 in the central and southern regions of Peninsular Malaysia would absorb about 149,630 tonnes of palm oil per year.
The MPOB data, it said, showed CPO inventory fell by 3.9% on-month in Peninsular Malaysia in July. In contrast, CPO inventory in Sarawak continued to rise in July, recording a on-month rise of 27.3%. Inventory of CPO in Sabah was relatively flat in July.
Average CPO price was RM2,325 a tonne in July 2013 versus RM2,387 in June. CPO price averaged RM2,317 a tonne in the first seven months of the year.
The research house said its CPO price assumption was RM2,400 a tonne for 2013.
The recovery in CPO production was led by Sarawak, which recorded a 26.8% MoM expansion in July. CPO output rose by 18.3% on-month in Peninsular Malaysia while Sabah registered a 12.8% improvement.
CPO production amounted to 10.1 million tonnes in the first seven months of the year, 5.9% higher than the 9.5mil tonnes recorded in the same period last year.
Amresearch said for the full year, industry experts are forecasting Malaysia's CPO output between 18.4 million and 19 million tonnes.
While exports of palm oil stagnated on-month in July but on a on-year basis, exports rose by 9.4% to 1.42 million tonnes in July.
It pointed out a a 12.3% increase in exports to China helped compensate for lower demand from Pakistan and Netherlands in July.
“Exports of biodiesel continued to climb. Biodiesel exports expanded by 71% MoM to 33,336 tonnes in July. Year-to-date, biodiesel exports amounted to 105,928 tonnes.
“We believe that Malaysian biodiesel producers are taking advantage of the provisional anti-dumping duties imposed by the European Union on the Indonesian companies,” added Amresearch.