CPO: Highlights from palm oil conference in KL. Industry analysts are projecting Msia and Indonesia production to increase by 1.8-2.6m MT in 2011 (+0.5m in 2010). Sharp recovery in production due to yield improvement from favourable weather and higher mature acreage. Deutsche’s forecast is for output from these two countries to improve by 2.8m MT in 2011. CPO price is expected to pull back on strong recovery in production....
However downside could be limited due to low inventory lvls, demand from China and India as well as Middle East tensions. 2H2011 forecast range from RM2500-3000/t and approx RM3100-3500/t for the full year from current RM3700/t level…
Higher crude oil prices could lead to higher biofuel production resulting in greater demand for agri-comms particularly in the US. Other factors to watch include China’s govt intervention and excessive liquidty. In a separate report, UBS has noted that CPO prices have been weaker than expected but remains positive outlook. Top picks for sector is Golden Agri, previously Indofood Agri, due to leverage to upside in CPO prices.
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