Plantation stocks in Malaysia rise amid high palm oil prices

By Chester Tay

KUALA LUMPUR, Malaysia — Shares of Malaysian plantation companies extended their recent rally on Friday ahead of the release of quarterly results, which should reflect benefits from high crude palm oil prices.

Sime Darby Plantation Bhd. rose 7.4% and is on track to post a nearly 20% gain this month alone, while Kuala Lumpur Kepong Bhd. climbed 5.5%, with gains of 11% since the start of the month. Both companies are expected to release their quarterly results next week.

Among other plantation stocks, FGV Holdings Bhd. rose 3.3% and IOI Corp. gained 1.0%.

The market appears to be pricing in crude palm oil supply risks after official data showed the country’s stock level at end-January was lower than expected at 1.55m tonnes, following a 4% decline on the month due to higher exports, CGS-CIMB mentioned. The brokerage expects this trend to continue, predicting that Malaysian palm oil stocks at the end of February will be 5.3% lower than the previous month.

January exports were higher than expected despite demand rationing by price-sensitive consumers, the brokerage said.

CGS-CIMB expects palm oil prices to remain firm amid tight near-term supply conditions and concerns over delayed palm oil export shipments from Indonesia after new export restrictions.

The brokerage raised its forecast for the average price of crude palm oil in 2022 to 4,100 ringgit ($980.04) a tonne, from MYR 3,600 previously, to reflect a slower-than-expected resolution to oil shortages. foreign workers in Malaysia, new Indonesian export limits and concerns. on the drop in soybean supply due to a persistent drought in South America.

Write to Chester Tay at [email protected]

Steve R. Hansen