AFFIN HWANG: CPO PRICES LIKELY TO RISE

Boost seen from falling Indonesian palm oil inventory levels, says research firm

INDONESIA’S palm oil inventory levels are expected to fall gradually, said Affin Hwang Capital.

This could help improve crude palm oil (CPO) prices to RM2,400 a tonne this year from RM2,232 a tonne last year, benefiting Malaysian and Indonesian planters, said the research firm.

Indonesia’s palm oil output likely rose last month while exports were seen lower compared to a month earlier, a Reuters survey showed.

Palm oil output in top producer Indonesia were seen at 3.8 million tonnes last month from 3.6 million tonnes a month earlier, according to a survey of two palm oil groups and a state research firm.

Exports from the country were estimated at 2.88 million tonnes last month, compared with 3.05 million tonnes in January.

“As in Malaysia, we expect Indonesia’s palm-oil inventory levels to fall gradually with higher exports and consumption of palm-oil products,” said Affin Hwang after its visit to Genting Plantation Bhd’s PT Sepantang Inti Surya Mulia oil palm estate in West Kalimantan recently.

Together with Daiwa alliance partner Bahana Securities, Affin Hwang also visited local agencies for an update on Indonesia’s biodiesel programme and local plantation companies.

Affin Hwang said its key goal was to assess the prospects of Indonesia’s plantation industry as Indonesia supplied 57 per cent of global palm oil last year.

“The Indonesian government’s B20 biodiesel initiative has helped to create sustainable demand by absorbing domesticallyproduced palm oil for biofuel.”

Affin Hwang said Genting Plantation had a landbank of 64,60ha in Malaysia and 183,000ha in Indonesia.

Genting Plantation also operates seven palm oil mills in Malaysia and four in Indonesia.

The PT Sepantang estate is Genting Plantation’s earliest oilpalm estate in Indonesia with a total of 14,400ha.

Affin Hwang said major planting at PT Sepantang estate was done over the 2007-2012 period and 95 per cent of the total planted area of 11,800ha consisted of matured estates.