Plantation stocks up on higher Indonesian CPO export tax

KUALA LUMPUR: Selected plantation counters emerged as top gainers yesterday lifted by expectations that Indonesia’s higher crude palm oil (CPO) export tax may shift some buyers to Malaysia. This will help reduce local stockpiles.

“This is good news for Malaysia and the plantation counters. It should be able to boost Malaysia’s CPO exports and hopefully decrease our inventory,” said Interband Group senior palm oil trader Jim Teh.

According to statistics by the Malaysian Palm Oil Board, the local palm oil inventory was at its all-time high of 2.6 million tonnes last month.

Such high stock levels have been weighing down CPO prices over the past few months. With the prospect of the inventory coming down, Malaysian CPO futures for March 2013 delivery yesterday climbed RM31 or 1.4% to RM2,443 per tonne.

According to a foreign news report, Indonesia, the world’s largest palm oil producer, will impose a 9% CPO export tax in February from 7.5% previously. Malaysia will maintain its CPO export tax at zero for the month.

At yesterday’s close, PPB Group Bhd rose 30 sen or 2.42% to RM12.70, with 378,100 shares done.

OSK Research said it has a target price of RM14 for PPB, if the stock climbs above its recent high of RM13.20.

“PPB may rebound after staying above the RM12 support level. A purchase can be made if the stock closes above RM12.40, with a close below RM12 as a stop-loss.”

“The price target is at RM14, if the recent high of RM13.20 is broken. Failure to get above RM12.40 could see the stock slip, with supports anticipated at RM11.60 and RM11.20,” said the research house.

Kuala Lumpur Kepong Bhd increased by 20 sen or 0.91% to RM22.06 yesterday, with 282,600 shares traded.

Sime Darby Bhd saw 7.94 million shares traded, rising eight sen or 0.86% to RM9.37, while IOI Corp Bhd advanced six sen or 1.22% to close at RM4.99 with 2.3 million shares done.

However, Genting Plantations Bhd was the second top loser on Bursa Malaysia, as its price dropped 35 sen or 4.09% to RM8.20 on a volume of 450,900 shares.

According to a plantation analyst, a higher CPO export tax in Indonesia is to help its own refinery industry. “This is mostly positive for the company as it can help decrease its inventory level in Indonesia as well,” he added.

Reports of dry weather in South America have raised concerns the output of soy and grain products, a substitute to palm oil, will be affected.

Newswires reported that US grain and soybean futures inched higher on Monday as the dry weather is likely to affect output in Argentina, the world’s top soy exporter and the second largest corn supplier.

 

This article first appeared in The Edge Financial Daily, on Jan 30, 2013.

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