22/03/2010 (Today Online), Singapore - The expected strong demand for crude palm oil (CPO) from emerging economies will likely boost earnings of plantation-related companies this year, market experts say.

Even the likely volatility of crude palm oil (CPO) prices and the dry weather conditions may not derail their growth prospects, they added.

Listed companies such as Wilmar, Golden Agri-Resources and Kencana Agri had recently posted stellar full year earnings for last year and analysts remain upbeat that these palm-oil related firms are able to repeat their good performance as they still have more room to grow.

Mr Carey Wong, plantations analyst at OCBC Research said that emerging economies like China, India and Indonesia will continue to stoke demand of CPO.

"We remain moderately upbeat about the demand of crude palm oil and hence expect prices to average around US$700 a ton this year," says Mr Wong.

Analyst Rohan Suppiah of Kim Eng Securities said commodity companies are currently expanding their plantations as well.

"Despite short term price fluctuations in price and demand, most companies remain convinced of the long-term sustainability of demand," he said.

Among the risks facing these plantation companies are dry weather patterns that may cause volatility in output and consequently prices. Yet, analysts said that this risk may impact only certain companies with plantations in Malaysia as the country has seen more severe dry weather conditions recently.

Kim Eng's Mr Suppiah said Malaysian plantations have seen drier weather conditions, compared to their relatively unaffected Indonesian counterparts.

"Since Singapore-listed companies plantations are in Indonesia, this puts them in better position versus their Malaysian-listed counterparts," he added.