Friday July 30, 2004 - THE aggressive sell-down of crude palm oil (CPO) inrecent times, leading to a drop of more than 20% in CPO prices, was mainlysentiment driven by fears of a China slowdown, said AmResearch Sdn Bhd.

It said although it does expect a technical rebound in CPO prices in viewof the steep and sharp downturn, it maintained a longer-term downwardoutlook on CPO prices.

It said the management of plantation companies that it covered had variedviews on the prolonged drop in CPO prices.

A month ago, management of plantation companies was sitting tight andwaiting for the dust to settle before deciding on their next strategy withregards to forward selling policies.

Although this view has not changed much, the tone is slightly more bearishnow in terms of their forward policies, as the drop in prices has lasted abit longer than originally expected, the report said.

It is maintaining a neutral stance on the sector, as it believes even withCPO prices at current level, plantation companies are still veryprofitable, given their average production cost of RM650-RM700 per tonne.