Friday, November 30, 2012
By Shie-Lynn Lim
Palm oil, the world's cheapest available cooking oil, must drop 7% in the next four to six weeks to attract demand and lead to a decline in record stock levels, top vegetable oil analyst Dorab Mistry said Friday.
Reiterating a forecast earlier this month, Mr. Mistry, who also heads the vegetable oils trading desk at Godrej International Ltd., said prices need to drop to 2,200 ringgit a metric ton "in order to attract massive energy demand so as to reduce and clear stocks."
Once stocks are cleared and demand improves, prices could rise to as much as MYR2,600/ton by February, he said.
Benchmark palm oil futures on Malaysia's derivatives exchange have slumped 26% so far this year as slowdowns in China and the European Union curbed demand for the tropical oil, which is used to make a wide variety of products from toothpaste to noodles and biodiesel.
The fall in demand pushed stockpiles to a record high in Malaysia, the world's no. 2 producer.
Over the next few weeks, output will likely rise in top producer Indonesia, weighing further on prices.
"Indonesian production is running ahead of [my] expectations. Output is peaking this month in November and looks likely to exceed my estimate of 27.5 million tons for 2012," Mr. Mistry said in a prepared speech ahead of a conference in Bali.
He also maintained Malaysia's production at 18.4 million tons this year.
Production in Indonesia and Malaysia, which together account for more than 80% of global production, will continue to expand in the year ahead "since there has been no major weather disturbance. Production in September-December could rise to new highs, possibly creating new monthly production records in both countries."
He expects Malaysian production to recover to 19 million tons in 2013 and pegs Indonesian output between 29.5 million and 30 million tons.
During the 2012-13 marketing year that began Oct. 1 , global consumption may grow by about 4 million tons, outpacing supply growth of 3.2 million tons.
Incremental demand will exceed supply, but Mr. Mistry doesn't expect a sharp surge in prices next year.
"We started the new oil year with the heaviest stocks in history. The massive overhang from the previous year will cushion the impact of lower vegetable oils production in the first half."
From March, a recovery in soft oils production and the anticipation of major soy, canola and sunseed crop harvests "will prevent any thoughts of a price rally" in global vegetable oils, he said.
Rival soyoil, which competes with palm oil for similar export markets, may trade in a $900-$1,020/ton range from May 2013, compared with offer prices of $1,105/ton earlier this week, he said.
DJ MARKET TALK: Malaysian Shares Likely Up; HwangDBS Tips 1617 Cap
Malaysian shares are likely to rise, tracking gains on Wall Street's gains Thursday; HwangDBS says the benchmark KLCI may continue to ride on its technical strength by swinging sideways with a marginal positive bias. "However, the benchmark index's immediate upside potential will likely be capped by the 160-day moving average line which currently stands at 1617," the house says. The KLCI ended Thursday up 0.1% at 1607.32. Genting (3182.KU) and KPJ Healthcare (5878.KU) will be in focus after their quarterly results came in below market expectations. (email@example.com)
Thursday, November 29, 2012
DJ MARKET TALK: Malaysia Shares Likely In 1600-1617 Band - HwangDBS
0046 GMT [Dow Jones] Malaysia shares will likely struggle to find more upside after the benchmark KLCI staged a technical rebound Wednesday; "On the chart, we reckon the KLCI will likely run into resistance at the 160-day moving average line which presently hovers at 1617," says HwangDBS. Immediate support is seen at the psychological 1600 mark, the house adds. The KLCI ended up 0.5% at 1606.52 Wednesday. Among stocks in focus, Maxis (6012.KU) may fall after its latest quarterly profits came in below expectation, while Axiata Group (6888.KU) is scheduled to release its quarterly results during the midday break
Wednesday, November 28, 2012
DJ MARKET TALK: Kenanga Keeps Sime Darby At Market Perform
0714 GMT [Dow Jones] STOCK CALL: Kenanga Investment Bank maintains Sime Darby Bhd (4197.KU) at Market Perform but lowers its target to MYR9.00 from MYR9.80 previously, following significantly lower 1Q earnings from its plantations division. The house lowers its FY13-FY14 earnings forecast by 7% to MYR3.68 billion-MYR3.83 billion after factoring lower average crude palm oil price for 2013 and 2014 to MYR2,850/ton vs MYR3,000/ton previously. The conglomerate's "unexciting FY13 earnings growth should limit upside to its share price," it notes. Sime Darby is down 3.0% at MYR8.97.
DJ MARKET TALK: Malaysia's KLCI 10% Potential Upside In 2013-AmBank
0502 GMT [Dow Jones] Malaysia's benchmark 30-share KLCI has potential upside of about 10% through 2013 from its current level, to be driven by robust economic growth led by the Economic Transformation Program, says AmBank. Malaysia's KLCI has lagged Asean peers this year, and has risen only about 5% compared to more-than-20% gains in the Philippines and Thailand. "On the flip side, this relative under performance also underscores prospects of outperformance post-General Elections 2013 because its premium valuation has narrowed," says the report. The house tips under a base-case, for the KLCI to be fairly-valued at 1,770 by 2013-end based on trend-average 15X FY13 earnings. The KLCI is currently up 0.4% at 1604.84 midday break.
DJ MARKET TALK: Malaysia's KLCI Down 0.4%; May Fall Towards 1563 - HL
0242 GMT [Dow Jones] Malaysia's KLCI is down 0.4% at 1593.38 as investors continue to lighten their portfolios ahead of the year-end as well as a general elections that must be held in the country by early next year; so far this month, the benchmark index has declined almost 5%, spending most of the month trading in negative territory. "In the near term, trading sentiment on Bursa Malaysia will remain bearish, mainly attributable to the uninspiring ongoing 3Q results season and local election risks," says Hong Leong IB. The house tips the KLCI to drift towards 1583 and 1563 before a more sustainable rebound kicks in. Market breadth is negative at 310 losers and 134 gainers with 325.0 million shares changing hands. Among top losers on the benchmark index, Petronas Chemicals (5183.KU) is down 2.6% at MYR5.93, Genting Malaysia (4715.KU) is down 2.3% at MYR3.43 and UEM Land (5148.KU) is down 0.9% at MYR2.13.
Tuesday, November 27, 2012
KUALA LUMPUR--Sime Darby Bhd. (4197.KU), the world's largest listed palm oil producer by acreage, said Tuesday first-quarter net profit fell 7.4%, dragged down by its mainstay plantation business and healthcare division.
Net profit for the three months ended Sept. 30 was 990.3 million ringgit ($324 million), compared with MYR1.07 billion in the same quarter a year earlier, it said in a statement to the Malaysian stock exchange.
This was the company's second consecutive quarter of net profit decline.
Revenue, however, rose 7.0% on-year to MYR11.83 billion from MYR11.06 billion.
Sime Darby said it is targeting a net profit of MYR3.2 billion for the financial year ending June 30. This compares with a MYR4.15 billion net profit recorded during the previous fiscal year.
"While the overall economic environment will be challenging, the group is positive that the strength and diversity of the group's six core businesses and its strategic focus will place the group in a strong position to withstand the economic headwinds," Sime Darby said.
Apart from plantation and healthcare, Sime Darby is also involved in property development, industrial equipment, automotive and port operations.
By Jason Ng
0219 GMT [Dow Jones] BMD CPO futures may rise at the start of trading Tuesday on the back of upbeat external sentiment after euro-zone ministers reached a deal to provide support to Greece and gains in CBOT soyoil futures. Palm oil is tipped to move within a MYR2,400-MYR2,450/ton range, as investors turn focus to price outlooks by leading vegoil analysts James Fry, Thomas Mielke and Dorab Mistry in Bali later this week and the U.S. fiscal cliff negotiations. Benchmark February CPO ended 1.5% higher at MYR2,432/ton Monday/ton; CBOT December soyoil settled 0.5% higher at 49.27 cents/lb Monday and was last trading 0.5% higher in screen trade. (firstname.lastname@example.org)