KUALA LUMPUR: Plantation counters, including PPB Group Bhd and Kuala Lumpur Kepong Bhd, closed higher on July 21 despite a reversal in crude palm oil’s (CPO) gains in the last two weeks.
CPO for October delivery closed RM17 or 0.8% lower at RM2,143 a tonne on July 21.
PPB, the top gainer for the day, closed 40 sen higher at RM13, an all-time high.
Kuala Lumpur Kepong, the country’s third-largest publicly traded palm oil producer, climbed 20 sen to an 11-month high of RM12.30.
IOI Corporation Bhd added four sen to RM4.84 while Batu Kawan Bhd, Kulim (M) Bhd and IJM Plantation Bhd rose five sen each to RM8.85, RM7.10 and RM2.80, respectively.
Meanwhile, Far East Holdings Bhd, Genting Plantations Bhd and Sime Darby Bhd remained unchanged at RM6.20, RM5.60 and RM7.55, respectively.
“The stock movements were generally due to trading for profit taking. There was no known major news supporting the rally in these counters,” a stockbroker told The Edge Financial Daily.
CPO has been gaining steadily since July 8 on anticipation of improved demand due to an expected economic recovery. However, a futures dealer said the outlook of CPO at this point was uncertain.
“The commodity market is responding to the rebound in the financial markets. But the factors are quite mixed at the moment,” she said.
“On the one hand, production has increased and supply is not so tight anymore. Worries that demand will not pick up as much may push the price down. On the other hand, the recent export figures have been positive and there is not much sign of decline.”
According to cargo surveyor Intertek, Malaysia’s palm oil exports increased 16% month-on-month to 913,153 tonnes in the first 20 days of July. Societe Generale de Surveillance said exports gained 10% to 875, 330 tonnes for the same period.
The dealer added if these factors remained, CPO could remain in the RM2,000 to RM2,200 band for the next one to two months.
“We will have to see the supply and demand difference but they are not very clear now,” she said.
Meanwhile, Indonesia, the world’s biggest CPO producer reported that the current dry weather could cause production to be reduced by 20% next year.
An analyst from a local research house said the news from Indonesia would have little impact on CPO prices as Sabah’s output was expected to improve in the later part of this year.
“The recent gains in CPO are not surprising but there is a lot of headwind against the uptrend. The weather in Indonesia has already been priced in. Furthermore, the Sabah production would be back to normal by August. CPO may go up another RM100 at the most before the jump in production hits the market,” the analyst said.