Plantation firms, smallholders likely to reap further gains
Update Date：2016-12-23 17:08:19 Source：Tannet (Malaysia) Sdn Bhd Views：711
KUALA LUMPUR: Local plantation companies and smallholders are likely to see further gain from the expected continued increase in crude palm oil (CPO) prices due to a potential limited supply until March next year and stable demand from China ahead of Chinese New Year. Another commodity, rubber, could also offer the same fortune to companies as well as smallholders on the back of stronger global demand. A strong US dollar and a limited supply due to the El Nino phenomenon have also had a positive impact on CPO prices. It was reported that this year, palm oil production in Indonesia and Malaysia, which account for 85 per cent of global supply, is forecast to fall by five per cent to 58.8 million tonnes. MIDF Research analyst Alan Lim expects CPO to trade at a higher range of RM2,800 to RM3,300 per tonne in the next three months. “The demand is expected to remain stable due to stocking activity ahead of the Chinese New Year celebrations in China. “For supply, we are still in the seasonal production downtrend, which should last up to February or March 2017,” he told Business Times. The Malaysian Palm Oil Board said recently CPO prices were expected to increase until the middle of next year, in tandem with crude oil prices. CPO closed at RM3,070 per tonne yesterday, up 39.5 per cent from its one-year low of RM2,201 previously. Yesterday, Ta Ann Holdings Bhd’s shares rose to a three-month high to RM3.92 due the increase in the CPO price. Other plantation stocks also rose, albeit at smaller pace. IOI Corp Bhd and TSH Resources Bhd rose one sen to RM4.39 and RM1.87, respectively, and KL Kepong advanced eight sen to RM23.74. Meanwhile, the benchmark commodity price for rubber closed at RM8.54 per kg yesterday, more than twofold of its one-year low of RM4.25. Business Times has reported that the uptrend in the rubber price is very much influenced by recent developments in China’s automotive industry. Malaysia is the world’s fifth largest producer of natural rubber with its smallholders supplying 95 per cent of the country’s output of 720,000 tonnes last year. However, among rubber-related stocks on Bursa Malaysia, Kossan Rubber Industries Bhd was the only one to rise yesterday, increasing three sen to RM6.48.
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