MARKET DEVELOPMENT
Decline In CPO Prices Underpin Negative Outlook For Industry - Fitch
Decline In CPO Prices Underpin Negative Outlook For Industry - Fitch
01/09/2015 (Bernama) - The continued decline in crude palm oil (CPO) prices and uncertainty over when they would recover underpin Fitch Ratings's negative outlook for the industry for the next twelve to eighteen months.
In its Crude Palm Oil Dashboard 2H15 Report, the rating agency said the continued decline in CPO prices has resulted in thinner earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin and higher financial leverage among Asia-Pacific producers.
Among them were large-scale CPO cultivators and processors.
"The downward trajectory in CPO price continues, declining by 26.5 per cent since January 2014 to US$636/metric tonne in July 2015," Fitch said.
The driving factors were low crude oil prices, it said.
The CPO price was closely correlated on account of CPO being a bio-diesel input, it said.
The report said both Malaysia and Indonesia maintained high cultivation efficiency, resulting in robust output.
It said closing stocks in Malaysia and stagnant exports had resulted in the closing CPO stock rising to 42 days of CPO output in July 2015 from 33 days in January 2015.
In its Crude Palm Oil Dashboard 2H15 Report, the rating agency said the continued decline in CPO prices has resulted in thinner earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin and higher financial leverage among Asia-Pacific producers.
Among them were large-scale CPO cultivators and processors.
"The downward trajectory in CPO price continues, declining by 26.5 per cent since January 2014 to US$636/metric tonne in July 2015," Fitch said.
The driving factors were low crude oil prices, it said.
The CPO price was closely correlated on account of CPO being a bio-diesel input, it said.
The report said both Malaysia and Indonesia maintained high cultivation efficiency, resulting in robust output.
It said closing stocks in Malaysia and stagnant exports had resulted in the closing CPO stock rising to 42 days of CPO output in July 2015 from 33 days in January 2015.