14/05/2014 (The Star) - Affin Research has maintained its Overweight on the plantations sector with a crude palm oil (CPO) average selling price (ASP) of RM2,700 per mt for 2014 and RM2,850 per mt for 2015 and 2016.

It said in a note on Wednesday that the latter higher forecast to be underpinned by higher edible and non-edible demand and declining world stocks-usage ratio.

“Sentiment in the futures market continues to be capped by lacklustre exports, as yields swing higher towards seasonal highs around October.

Meanwhile, it said Oil World has raised its world production estimate for the 7 Oilseeds by 0.4% from March mainly on expectations of higher soybean output.

“The stock-usage for the 8 Major Oils is however still projected to decline to 13.6% from 13.8% in 2012/13 and 14.3% from 2011/12,” it said.

On the weather front, torrential rains in the afternoon and evening are helping to replenish dams and reservoirs in Malaysia, it said.

“The US NOAA however has raised the chance of El Niño during the summer to over 65% although the advisory noted “uncertainty as to exactly when El Niño will develop and an even greater uncertainty as to how strong it may become”.

“The Malaysian Meteorological department has also issued dry weather warning from June to September,” it noted.