Plantation stocks at multi-month highs as CPO futures breach RM5,000

Plantation stocks at multi-month highs as CPO futures breach RM5,000
-A +A

KUALA LUMPUR (Oct 7): Plantation stocks such as Kuala Lumpur Kepong Bhd (KLK), Genting Plantations Bhd and Sime Darby Plantation Bhd rose to multi-month highs on Wednesday, as crude palm oil (CPO) futures breached the RM5,000 per tonne mark for the first time.

CPO futures for October closed at RM5,067 per tonne, after earlier touching an intraday high of RM5,096. The benchmark contract for December, meanwhile, rose 2.8% to RM4,872.

The gains were amid several bullish factors, including the outlook for lower inventories in Malaysia, sturdy demand and concerns that production by top growers will fall short of expectations, said CGS-CIMB Futures Sdn Bhd.

“Demand from India, the top buyer, has climbed ahead of a festival season as vegetable oils are used to make local sweets, fried food and other treats. Prices are also aided by economies reopening following Covid-19 lockdowns, boosting food and fuel consumption of edible oils,” the research house said in a note.

RHB Retail Research said there could be some profit-taking activity in the near term, with immediate support at the RM4,650 level.

However, it said the peak has not been sighted yet, and therefore CPO futures could rise higher on strong momentum.

“We therefore maintain our bullish trading bias,” it said.

As CPO prices reached new heights, plantation counters rose to levels last seen in June.

KLK recorded the highest gain by value, closing RM1.72 or 8.5% higher at RM21.90 for a market capitalisation of RM23.67 billion, followed by Genting Plantations which rose 79 sen or 11.5% to RM7.69, and Sime Darby Plantation, which gained 54 sen or 14.8% to RM4.20.

Other plantation companies also rose, such as Batu Kawan Bhd (up 2.5% at RM21.20), United Plantations Bhd (up 2.6% at RM14.12), IOI Corp Bhd (up 8.2% at RM4.08) and PPB Group Bhd (up 1.6% at RM18.70).

The Bursa Malaysia Plantation index closed up 512.99 points or 8% at 6,917.23, while the FBM Palm Oil Plantation-NC index increased 1,014.53 points or 10% to 11,163.95.

Both indices outperformed the benchmark FBM KLCI’s 1.9% gain.

To receive CEO Morning Brief please click here.

Tan Choe Choe