AmWatch - Plantation Sector : Key takeaways from POC – Day 1 OVERWEIGHT, 5 Mar 2014

STOCK FOCUS OF THE DAY

Plantation Sector : Key takeaways from POC – Day 1       OVERWEIGHT

Yesterday, Tan Sri Yusof Basiron predicted that CPO prices would trade between RM2,600/tonne and RM3,000/tonne in 2014F.

He defended the palm oil industry in Malaysia against the deforestation policy of some companies. He said that oil palm only accounts for 0.31% of the world’s agricultural areas of 5bil ha. Also, Sarawak removes more carbon dioxide than it emits.

He said that consumer companies in the world are under pressure from environmental organisations to buy traceable and sustainable palm oil. In the West, there is a stigma that palm oil is environmentally unfriendly.

RSPO is gaining worldwide acceptance. For national standards to be successful, they will have to go beyond RSPO requirements. According to Yusof, MSPO might only be rolled-out in 2015F.

Mr Dorab Mistry said that CPO prices would have crashed last year if it were not for Indonesia’s biodiesel policy. Although Indonesia’s B10 biodiesel policy might not be fully implemented this year due to logistics issue and the lack of response to Pertamina’s tender, the initial implementation of the policy has helped support CPO prices. Apart from being the world’s largest producer of palm oil, Indonesia might also turn out to be one of the largest consumers of palm oil due to the biodiesel policy. 

Mr Fadhil Hasan from Indonesia said that palm oil exports from Indonesia would remain flat YoY at 19.7mil tonnes in 2014F. He does not expect an uptick in demand from China and Europe as buyers are likely to switch to soybean. Hence, the bulk of palm oil would be used domestically. Domestic consumption of palm oil in Indonesia is forecasted at 10.5mil to 11mil tonnes this year. CPO production is estimated at 28.5mil to 30mil tonnes. Mr Fadhil Hasan forecasts CPO prices to trade between US$925/tonne (RM3,053/tonne) to US$975/tonne (RM3,218/tonne) this year. 

Others :

AirAsia : Updates from post-results meet             HOLD

Banking Sector : 4Q results wrap-up: Higher LDR and intensified deposit competition   NEUTRAL

NEWS HIGHLIGHTS

Axiata Group : Celcom investing RM1bil in capex for 2014

Malaysia Airports Holdings : Placement shares fixed at RM7.90

Mah Sing Group : RM411mil JB land deal hits another snag

Oil and Gas Sector : Shamsul warns of declining charter rates

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