MARKET DEVELOPMENT
CIMB Research Positive on Plantations Long-term Prospects
CIMB Research Positive on Plantations Long-term Prospects
12/10/2015 (The Star) - CIMB Equities Research is positive on the long-term prospects of the plantation sectors, if the Malaysian and Indonesian governments can collaborate effectively to tackle the key challenges.
It said on Monday it was also positive on the recent discovery of the gene responsible for the low-yielding mantled fruit by the Malaysian Palm Oil Board (MPOB) genome team, which should help to raise future fresh fruit bunches (FFB) yields of the palm oil industry.
CIMB Research said it attended the biennial PIPOC conference last week, which is the biggest gathering of the palm oil industry, where the participant focused on current as well as relevant issues and happenings within the palm oil industry.
Among the highlights were that palm oil is the most efficient vegetable oil crop in the world due to its superior oil yields per hectare against other crops.
“We gathered that by 2050, the world would require 150 million tonnes of additional edible oils. Palm oil will be able to supply these requirements with the least amount of land compared to other oil crops.
“We gathered that the industry is also facing increasing challenges in the form of: (1) rising costs of production against other competing edible oils due to stagnant yield and rising labour costs; (2) negative perception of palm oil; and (3) trade restrictions,” it said.
CIMB Research pointed out Indonesia and Malaysia recently announced plans to set up the Council of Palm Oil Producing Countries (CPOC). The areas that both governments hope to collaborate on include (1) addressing the low CPO prices; (2) better coordination in promoting as well as countering the negative perception of palm oil and (3) promoting the Asean Palm Oil Sustainability Platform.
It also said Dr James Fry from LMC predicted that the CPO price could rise to US$600 per tonne (RM2,460 per tonne) by the end of 1Q16 due to tighter supply conditions.
He had also projected Indonesian biodiesel consumption to rise to 2.6 million tonnes in 2016, from 1.2 million tonnes in 2015. This is broadly in line with our 2016 average price forecast of RM2,450.
It said on Monday it was also positive on the recent discovery of the gene responsible for the low-yielding mantled fruit by the Malaysian Palm Oil Board (MPOB) genome team, which should help to raise future fresh fruit bunches (FFB) yields of the palm oil industry.
CIMB Research said it attended the biennial PIPOC conference last week, which is the biggest gathering of the palm oil industry, where the participant focused on current as well as relevant issues and happenings within the palm oil industry.
Among the highlights were that palm oil is the most efficient vegetable oil crop in the world due to its superior oil yields per hectare against other crops.
“We gathered that by 2050, the world would require 150 million tonnes of additional edible oils. Palm oil will be able to supply these requirements with the least amount of land compared to other oil crops.
“We gathered that the industry is also facing increasing challenges in the form of: (1) rising costs of production against other competing edible oils due to stagnant yield and rising labour costs; (2) negative perception of palm oil; and (3) trade restrictions,” it said.
CIMB Research pointed out Indonesia and Malaysia recently announced plans to set up the Council of Palm Oil Producing Countries (CPOC). The areas that both governments hope to collaborate on include (1) addressing the low CPO prices; (2) better coordination in promoting as well as countering the negative perception of palm oil and (3) promoting the Asean Palm Oil Sustainability Platform.
It also said Dr James Fry from LMC predicted that the CPO price could rise to US$600 per tonne (RM2,460 per tonne) by the end of 1Q16 due to tighter supply conditions.
He had also projected Indonesian biodiesel consumption to rise to 2.6 million tonnes in 2016, from 1.2 million tonnes in 2015. This is broadly in line with our 2016 average price forecast of RM2,450.