Palm prices could rise to RM2,950/T in January if Brent oil gains: Fry Reuters
November 03, 2017 16:00 pm MYT
NUSA DUA, Indonesia (Nov 3): Malaysian crude palm oil (CPO) prices could rise to a high of RM2,950 (US$697) per tonne in January before falling to RM2,600 if oil prices rise until the second quarter of the year, leading analyst James Fry forecast on Friday.
Fry, the chairman of commodities consultancy LMC International, had last forecast in September for Malaysian benchmark prices to fall below RM2,400 per tonne in November and December, as overseas appetite for the commodity falters over the winter period.
"Brent is pulled between Saudi Arabia's desire to raise values before the huge Aramco IPO and US shale oil's response to higher prices," he said, referring to the initial public offering of Saudi Aramco, Saudi Arabia's state-owned oil company.
"If you think the Saudi's will hold sway, at least until 2Q, CPO futures peak at RM2,950 in January and then fall back towards RM2,600," he said at an industry conference in Bali, Indonesia.
With Brent prices at US$60 a barrel, Fry estimates palm oil peaking at over RM2,800 per tonne in January, before falling below RM2,500.
Prices of the tropical oil would drop towards RM2,300 per tonne with oil prices at US$55 a barrel, he added.
Benchmark Bursa Malaysia crude palm oil futures climbed to their highest since Sept. 15 earlier this week, but is down about 9% so far this year.
It was last down 0.6% on Friday evening at RM2,804 a tonne.
Brent crude oil prices rose as high as US$61.70 a barrel on Wednesday, its highest intraday level since July 2015, and was last up 0.2% at US$60.71 a barrel.
Palm oil prices are expected to climb as production growth this year has not come in as much as expected due to the lingering effects of the El Nino.
The El Nino weather pattern in 2015 curtailed palm oil production in Southeast Asia as it brought hot, dry weather to the region that limited palm fruit yields.
Fry later said on the sidelines of the conference that Malaysia's palm oil production could reach nearly 21 million tonnes in 2018.
Indonesian output this year is forecast at nearly 36 million tonnes, said Fry, and could see additional growth of 4 million tonnes in 2018.
"For Indonesia we have an increase of another 4 million tonnes or so from 2017. The recovery is continuing, and a lot of the area planted is maturing, so you add all these things," he said.
Indonesia and Malaysia produce nearly 90% of global palm oil supplies.
Goldman Sachs: A Very Bullish Case For Commodities
By Nick Cunningham - Nov 05, 2017, 3:00 PM CST Trading Screen The fortunes of oil and gas producers have been dramatically different from metal producers this year. Energy prices have been lackluster, and energy stocks have fared even worse. Meanwhile, prices for a variety of metals have jumped sharply. Taken together, commodity prices broadly are more or less flat, but that obscures the very different performances between energy and metals this year.
According to a recent report from Goldman Sachs, entitled, “Metals Shine as Oil Volatility Dulls,” demand for all sorts of commodities has been very strong in 2017, both energy and metals included. “[A]ll markets are currently facing the best demand backdrop in over a decade with strong global synchronous growth,” Goldman wrote.
With demand strong for both metals and energy, the difference between the two sectors in 2017 has been on the supply side. There has simply been too much oil supply, keeping a lid on prices and depressing the value of energy stocks. Goldman says things have been worse for oil and gas producers than it expected, with the rebound in shale production exceeding forecasts.
But that hasn’t occurred in the market for metals. “Not only is there no shale equivalent in metals, energy faces excess capacity in services which keeps cost in?ation in check. In contrast, metals have less spare capacity and are facing cost in?ation,” Goldman analysts wrote in the October report.
Nevertheless, Goldman laid out a bullish case for the entire commodity sector, including oil. There are several reasons why the investment bank reached this conclusion. The first is based on the “maturing business cycle.” Specifically, we are at a particular point in the business cycle – phase 3 – called the “growth above capacity” phase, which is to say, “where commodities outperform other asset classes and policy makers are forced to put the brakes on growth,” Goldman argued.
The logic is that commodities perform well during periods in which central banks are tightening interest rates. That relationship comes down to the fact that central banks are trying to get a hold on rising prices – directly the result of rising prices for commodities. So, in essence, rising commodities prices force central banks to hike rates. But there is a window when commodity producers are doing really well before the tighter monetary conditions kick in. Industrial metals typically rise by 50 percent during the rate hiking cycle, according to the report. Currently, metals prices have jumped 25 percent, so there is more room to grow.
for reference ------------------- Wilmar profits dip, as Indonesia's biodiesel setbacks bite News 13 Nov 2017 by Mike Verdin
Wilmar International unveiled a slightly bigger-than-expected drop in earnings, undermined by factors including a delay to sales from its Australian sugar business, and a drop in Indonesian biodiesel quota.
The Singapore-based agricultural trading giant, in which US major Archer Daniels Midland in August raised its stake to 24.9%, revealed a drop of 5.7% to $370.0m in earnings for the July-to-September quarter, below the $378m figure that investors had expected.
The decline - heralded at the end of last month by ADM, which said that Wilmar’s results had been “lower than anticipated” – defied what Wilmar termed a “robust performance” in oilseeds and grains, in which it reported a 2.3% rise to $253.7m in pre-tax profits.
The division’s gains, on revenues up 16.8% at $5.54bn, reflected “higher crush volume and good crush margins”, said Wilmar, the largest crusher in China, and which claims a global workforce of some 90,000 people.
Sugar sales delays
However, this “good performance” was “offset by weaker results in the tropical oils and sugar businesses”, Wilmar said.
Underlying group earnings fell by 15.9% to $323.7m, said the company, which reported revenues flat at $11.1bn.
Wilmar, which in 2010 paid Aus$15bn for Sucrogen, the sugar business of Sydney-based CSR, reported a 13.05 drop to $75.2m in pre-tax profits from sugar, “due to timing effects from the new Australian sugar marketing programme”.
Under this scheme, a “certain proportion of sugar produced would only be sold in the subsequent quarters”, said the group, which six months ago agreed concessions on sales to end an 18-month dispute with cane growers.
‘Lower processing margins’
In tropical oils – typically by far the biggest earner for the group, which is the world’s top palm oil processor – pre-tax profits tumbled 51% to $83.1m.
While reporting growth in yields and volumes at its own oil palm plantations, “lower processing margins affected the overall performance of the segment”, Wilmar said.
And sales volumes dropped 2.9% to 5.75m tonnes, “mainly due to lower biodiesel quota awarded in Indonesia”, which has seen setbacks from punitive import levies from the European Union and US to its plans to promote the biofuel.
Indonesia is estimated to have more than 11m tonnes in annual output capacity of biodiesel, yet consumes less than 3m tonnes itself, leaving producers largely reliant on exports to maintain volumes and margins.
Quota cut
In fact, Indonesia awarded Wilmar’s Bioenergi Indonesia business 175.3m litres in biodiesel quota to state energy company Pertamina for the May-to-October period, down from 241.4m litres the previous six months.
For the six months starting this month, the quota was lifted to 192.0m litres.
Nonetheless, Kuok Khoon Hang, the Wilmar chairman and chief executive, forecast a “satisfactory” performance for the tropical oils and sugar divisions in the current October-to-December quarter, with the oilseeds and grains business to see its “good performance” continue.
“With good economic performance in key Asian countries, we remain optimistic about the future of Asia,” he added.
The results were released after the close of Singapore’s stock market, where Wilmar shares closed up 0.3% at Sing$3.32.
If profit hit 80m above mean eps is around 14cent, I believe q4 also can provide fantasy result. This company 50% plant below age 10 years and 30% plant between 10 to 20 years, mean 80% plants consider young and within next few years should be also high production too. I think this company serious undervalued, dunt worry about share price temporary drop, maybe can change the mindset "that is a good opportunity to collect some more". :p
United plant share capital 207m, q3 profit 98m, q3 eps 0.47cents, PE 15.75, attractive dividend yield. Sop share capital 570m, q3 profit "if 80m", then q3 eps 0.14 cents, Ref today share price 4.39 then PE "will 9.75", dividend not so attractive, but in 2008 got bonus issue 1:1.
Conclusion sop haven't re-rating share price, almost ppl like to chase the uptrend share price, anyway I prefer buy it when is undervalue and wait, invest safe and sleep well. Happy invest, I am not call buy, I just share wat I had seen in this counter value. :D
Hi enning 22 , a bit confuse for me, since 2017 the share premium had became a part of share capital, but how come without offer bonus issue, is it on going to process soon. I think still using 208m share capital to calculate then just can get 47cents eps.
i think only reason why SOP cannot go up very high is the dividend payout. Once SOP give more than 50% as dividend,i cannot imagine how high the share price could fly.haha
Unitedplant very old company, since very beginning oilpalm industry first introduced in to malaysia, may be 50-60 years ago.UP's cost of production only 900 ringgit per tonnes,little expenditure other then fertilizerand harvesting cost. read the 2016 annual report. SOP had just bot new plantation, and not fully planted , some plantation acreage still under new plants and some yet to be planted , and so not being fully productive,need time to grow and get mature, any way check the FFB (fresh fruit bunches) has been increasing year to year,q to q.
印度炼油协会总经理B.V. Mehta称,全年的进口量不太可能显著变化,因为国内油籽供应有限,而需求旺盛。 that means india will buy as much as last year,and they see little changes in the total volumn in their import.
When a good prospect company (like SOP)share price tumble due to market fear as it's fundamental remained unchange, it's time for us to grab some. Think in different way in stock market will be rewarded.
I trust CPO stocks bec every month got report FFB output and we also read CPO price every day. Other sectors even good QR(past) not sure the next 1 should be equally good(eg HRC).
Banks, taxpayers and companies are on IRB’s hitlist as the taxman looks to collect RM134.7 billion in 2018. Meanwhile, lawyers say there are 'substantial merits' to reverse Stanley Thai’s conviction for insider trading.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
enning22
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Palm prices could rise to RM2,950/T in January if Brent oil gains: Fry
Reuters
November 03, 2017 16:00 pm MYT
NUSA DUA, Indonesia (Nov 3): Malaysian crude palm oil (CPO) prices could rise to a high of RM2,950 (US$697) per tonne in January before falling to RM2,600 if oil prices rise until the second quarter of the year, leading analyst James Fry forecast on Friday.
Fry, the chairman of commodities consultancy LMC International, had last forecast in September for Malaysian benchmark prices to fall below RM2,400 per tonne in November and December, as overseas appetite for the commodity falters over the winter period.
"Brent is pulled between Saudi Arabia's desire to raise values before the huge Aramco IPO and US shale oil's response to higher prices," he said, referring to the initial public offering of Saudi Aramco, Saudi Arabia's state-owned oil company.
"If you think the Saudi's will hold sway, at least until 2Q, CPO futures peak at RM2,950 in January and then fall back towards RM2,600," he said at an industry conference in Bali, Indonesia.
With Brent prices at US$60 a barrel, Fry estimates palm oil peaking at over RM2,800 per tonne in January, before falling below RM2,500.
Prices of the tropical oil would drop towards RM2,300 per tonne with oil prices at US$55 a barrel, he added.
Benchmark Bursa Malaysia crude palm oil futures climbed to their highest since Sept. 15 earlier this week, but is down about 9% so far this year.
It was last down 0.6% on Friday evening at RM2,804 a tonne.
Brent crude oil prices rose as high as US$61.70 a barrel on Wednesday, its highest intraday level since July 2015, and was last up 0.2% at US$60.71 a barrel.
Palm oil prices are expected to climb as production growth this year has not come in as much as expected due to the lingering effects of the El Nino.
The El Nino weather pattern in 2015 curtailed palm oil production in Southeast Asia as it brought hot, dry weather to the region that limited palm fruit yields.
Fry later said on the sidelines of the conference that Malaysia's palm oil production could reach nearly 21 million tonnes in 2018.
Indonesian output this year is forecast at nearly 36 million tonnes, said Fry, and could see additional growth of 4 million tonnes in 2018.
"For Indonesia we have an increase of another 4 million tonnes or so from 2017. The recovery is continuing, and a lot of the area planted is maturing, so you add all these things," he said.
Indonesia and Malaysia produce nearly 90% of global palm oil supplies.
(US$1 = RM4.2310)