by Jonathan Wong,
jonathanwong@theborneopost.com.
Posted on February 12, 2015, Thursday
KUCHING: Analysts reaffirm their neutral
stance on the plantation sector following the Malaysian Palm Oil Board’s (MPOB)
announcement of an inventory dip for January 2015 to 1.77 million metric
tonnes.
The lower MoM stockpile was largely due to
a seasonal decline in production), the lowest in 47 months, intensified by the
floods which hit parts of Peninsular Malaysia, Sabah and Sarawak; and a strong
domestic consumption, which more than offset weaker exports.
Affin Hwang Investment Bank Bhd (Affin
Hwang Capital) was one of the firms maintaining its neutral stance in addition
to upholding its estimated CPO price assumptions for 2015 up to 2017.
“CPO futures for the next three months are
now trading higher in the RM2,200 to RM2,400 per MT band,” it said in a note to
investors yesterday. “With regards to weather, most models now point to a 50 to
60 per cent chance of a weak and short El Niño event ending in early spring.
“We maintain our CPO ASP forecast of
RM2,400 per MT for 2015E and RM2,500 per MT for 2016E to 2017E as well as
neutral weighting for the plantation sector.”
TA Securities Holdings Bhd (TA Research)
expects the CPO price to continue trading within the RM2,200 – RM2,400 per
tonne range in 1QCY15.
At this juncture, any potential upside to
CPO price will be supply-side driven in its view.
“The recent dry weather in Brazil had
already resulted in a downgrade revision in soybean production forecast.
“In Indonesia, the dry weather in 3QCY14
could potentially result in negative lag impact in production in mid of this
year. In the meantime, recommendation on Plantation sector remains at neutral.”
Coupled with tight palm oil supply
expectation in 1H15 after a relatively good harvest in 2Q-3Q14, researchers at
Maybank Investment Bank Bhd (Maybankl IB Research) expects CPO price to make
its seasonally recovery in 1Q15.
The good harvest was potentially
aggravated by two distinct periods of dryness in 2014 which affected Sumatra,
Peninsular Malaysia and Central Kalimantan with a lagged impact on production,
it said.
“While the sector call remains neutral, we
maintain our view that there is still a short term trading opportunity in 1Q15.
This, however, assumes that crude oil (Brent) price bottoms out at US$55 per
barrel.”
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