Palm Oil: UOBK maintains market weight on sector. Says CPO price holding up well, due to lower palm oil inventory in Msia, as exports surge due to pick up in China purchases as the price discount against soya oil widens. Soybean prices have firmed as severe dryness hit central and northern Brazil pdtn areas. Notes China demand to continue into October as it replenishes its inventory after the recent stockpile release to stabilize domestic cooking prices...
Near term catalyst would be further strengthening of crude oil prices (+8% over past two wks), which would spark renewed interest in edible oil demand for non-mandated biofuel, and could lead to higher edible oil prices.
Top pick is Wilmar, as best proxy to rising edible oils and grains prices. TP $7.00.
Also likes Indofood Agri (Buy, TP $2.60)
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