Six speakers at the POC 2009 conference provided CPO price forecasts for various timeframes in 2009. Their estimates ranged from RM1,400 to RM2,300 per tonne, a narrower band than the RM2,500-4,500 range provided in the previous year. The main point we took away from the conference is the significant downside risk to CPO price in 2H09 if the palm oil experts’ predictions come to pass. Spot price is currently RM2,050, implying downside of up to 32% if CPO price drops to RM1,400 over the next six months.
Given that plantation share prices tend to track CPO futures, plantation stocks are in for a correction when CPO prices head south. As we concur with the speakers’ downbeat view on CPO and planters are trading at unattractive valuations, we continue to UNDERWEIGHT the regional plantation sector and prefer only the
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