Quick Takes – Regional plantation sector update – Greener shoots in Indonesia The fruits of our attendance at yesterday’s palm oil seminar were (1) Indonesia is expected to experience stronger palm oil output growth than Malaysia, (2) Malaysian producers’ palm kernel to CPO output ratio has been declining, in contrast to the experience of Indonesian players, (3) oleochemical producers in Indonesia currently enjoy significant cost advantages due to the export tax. We also gathered that LMC’s Dr Fry is less bearish on CPO price due to the higher crude oil price. These trends will benefit the planters with estates in Indonesia and reaffirm our preference for planters listed in Singapore and Indonesia. The regional plantation sector remains a NEUTRAL as we expect CPO price to trend lower in 2H11 due to higher inventories. Golden Agri remains our pick of the crop.
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