Other oil prices have yet to follow. The 23% rally in 3M soybean prices since early June was driven by the worst drought in the US since 1988. But soyoil prices (+8%) have lagged, and so have prices of palm (+0%) and rapeseed (+2%) oil. While the soyoil price rally has further upside should soybean crop prospects worsen, palm oil's discount to soyoil is likely to stay high given that we are entering the high production months for palm oil. We maintain our Neutral view on the sector over the next 12 months. Our preferred BUYs are growth stocks such as First Resources, Sarawak Oil Palms, and Ta Ann, while we reiterate our SELL on Wilmar.

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Source: Maybank Research - 25 July 2012