Weakening crude palm oil prices weighed on plantations
KUALA LUMPUR: Public Invest Research believes the worst is over for the Malaysian plantation sector and expects crude palm oil (CPO) prices to rebound ahead of a decline in inventories over the next six months.
The research house said on Tuesday Malaysia’s CPO istockpile experienced the first decline since June 2015 with a 9.5% drop last month. However, on the on-year basis, it jumped 30.5%.
It said the Malaysian plantation sector had a bad year in 2015 as average CPO prices shrank from RM2,415 a tonne to RM2,168, which was a 10% fall.
“We believe the worst is over and CPO prices should rebound gradually in anticipation of falling inventories over the next six months.
“We are positive on the CPO outlook with an average CPO price forecast of RM2,500 for 2016 and RM2,600 for 2017. Our top picks are Genting Plantations, Ta Ann, TSH Resources and TDM,” it said.
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