Palm Oil Report From HWangDBS
Don’t miss the boat
Flat September exports not a done deal. As expected, MPOB September data showed nearly flat palm oil exports (-0.4% m-o-m to 1.31m MT). This was due to drop in exports to India, partly offset by increased shipments to Pakistan, China and EU. At September end however, inventories were 11.5% higher m-o-m to 1.58m MT, due to seasonal uptick in production (+4.1%
m-o-m) to 1.56m MT. September estimated stock/ usage ratio therefore rose to 8.6% (from 7.7% in Aug).
Demand to re-enter markets. We continue to maintain our view that after near-term consolidation, palm oil prices may rebound in 4QCY09 on seasonal declining production trend, stronger soybean oil prices (on flat crushing activities), rebound in Indian demand, and weak USD. We also expect Chinese demand to reenter the market for December delivery, ahead of mid- February Chinese New Year.
Buy laggards. Given the above prospects, we believe that any near term correction should provide an opportunity to collect some laggards. Our top Buy picks remain Sampoerna Agro, KL Kepong, First Resources, IndoAgri, Kencana and Wilmar, as even at current levels, these counters have sufficient upside to our TPs. We also recommend switching out of high-PER counters.
Weak El Nino continues. NOAA report released last week indicated that ongoing weak El Nino is expected to strengthen and peak at moderate strength during mid September-mid December. It is expected to cause drierthan- average conditions over Indonesia. So far we have not imputed any impact from El Nino. Nevertheless, should El Nino manifest stronger, there would be potential downside revision to Indonesian CPO production for CY10F.
- September palm oil exports flattish (-0.4% m-o-m) at 1.31m MT; inventory up on seasonal uptick in production
- Rebound in CPO prices in 4QCY09 expected on demand recovery
- Collect laggards now, upside at decent 9-62%
- Weak El Nino continues; impact not included in our forecast
Flat September exports not a done deal. As expected, MPOB September data showed nearly flat palm oil exports (-0.4% m-o-m to 1.31m MT). This was due to drop in exports to India, partly offset by increased shipments to Pakistan, China and EU. At September end however, inventories were 11.5% higher m-o-m to 1.58m MT, due to seasonal uptick in production (+4.1%
m-o-m) to 1.56m MT. September estimated stock/ usage ratio therefore rose to 8.6% (from 7.7% in Aug).
Demand to re-enter markets. We continue to maintain our view that after near-term consolidation, palm oil prices may rebound in 4QCY09 on seasonal declining production trend, stronger soybean oil prices (on flat crushing activities), rebound in Indian demand, and weak USD. We also expect Chinese demand to reenter the market for December delivery, ahead of mid- February Chinese New Year.
Buy laggards. Given the above prospects, we believe that any near term correction should provide an opportunity to collect some laggards. Our top Buy picks remain Sampoerna Agro, KL Kepong, First Resources, IndoAgri, Kencana and Wilmar, as even at current levels, these counters have sufficient upside to our TPs. We also recommend switching out of high-PER counters.
Weak El Nino continues. NOAA report released last week indicated that ongoing weak El Nino is expected to strengthen and peak at moderate strength during mid September-mid December. It is expected to cause drierthan- average conditions over Indonesia. So far we have not imputed any impact from El Nino. Nevertheless, should El Nino manifest stronger, there would be potential downside revision to Indonesian CPO production for CY10F.
0 comments:
Post a Comment