First Resources

First Resources - No co. specific news, although do note that peer Bumitama is down ard 1.5% too. Recall that last week, Crude palm oil (CPO) prices fell for a fifth consecutive day to its lowest level in seven months, pressured by increased supplies and sluggish demand. CPO futures expiring in Aug ’14 fell 0.7% to RM2,484 per ton, the lowest level since 29 Oct ’13, with some analysts highlighting that exports year-to-date had been lower, leading to concerns that global demand for oilseeds this year is waning. Meanwhile, palm production is estimated to rise ~5% m/m in May ’14, which could push inventories higher. Analysts guide that May will be an important month to determine if orders for the upcoming Ramadan festival and orders from Europe could help to lift exports, although downside from current levels could be limited, due to the firming of soybean oil prices and low vegetable oil inventories in India, which could prompt a restocking soon. Some chartists expect palm oil prices to find support at RM2,472, as exhibited by its wave pattern and a Fibonacci projection level, and hover around there before staging a rebound towards RM2,510 (50% Fibonacci level). We note that recent CPO price movement gels well with Maybank-KE’s earlier forecast for CPO prices to weaken slightly to between RM2,400 and RM2,600 towards the May-Jun ‘14 period on concerns over the upcoming global oilseeds supply from South American harvests hitting the global market. Overall, the house is projecting CPO average selling price of RM2,600 for 2014 and 2015 (2013: RM2,377), unless a strong El Nino develops in 2H14. A weak El Nino may only push up CPO ASP forecast by RM100-200/ton.