Saturday, September 27, 2008
Kim Eng raises Goodpack target price
Kim Eng raises Goodpack target price to $1.94 from $1.65, maintains Buy rating. Expects Goodpack to get EBITDA of US$85-95 m with enlarged fleet of 2.5 m intermediate bulk containers (IBC). Also, steel, wood prices tripled since '01; upward steel price trend helped to shift demand from one-off steel drums to reusable IBCs. Notes, corporate restructuring at top management level has previous years of logistics experience from DHL which will free up management resources to source for more opportunities in new markets such as Japan, new products segments. "Divestment of fully-depreciated IBCs will yield handsome amount of US$22.5 m approximately; will buffer cash drain if its warrants are not converted."
Sinotel to benefit from potential huge capital spending
Phillip Securities starts Sinotel Technologies at Buy with $0.27 fair value, implying FY08 P/E of 3.95X, FY09 P/E of 3.44X. Expects China-based wireless telecom applications provider to benefit from potential huge capital spending by country's telcos as sector consolidates to upgrade infrastructure, improve competitiveness, prepare for 3G rollout; "Sinotel is well positioned to benefit from this restructuring given its good track record, long-standing working relationship with the telecommunication carriers and technological experience."
Asian palm oil plays look good value says Citigroup
Asian palm oil plays look good value despite recent correction in crude palm oil (CPO) prices, says Citigroup. Broker notes drop in CPO prices sharper than expected as strong palm oil harvests put pressure on prices. But says increasing attractiveness of biodiesel may provide support; "in our view reprieve will come from a generally unexpected corner: Biodiesel."
Says biodiesel refining margins attractive at current CPO price, refiners ramping up capacity, should take supply out of food oil market. Says, "all the CPO plays look good value against the backdrop of an expected bounce in CPO prices;" notes sector median PE multiple of 6.8x for both FY08/FY09. Recommends First Resources for play on biodiesel, undemanding valuation.
Says biodiesel refining margins attractive at current CPO price, refiners ramping up capacity, should take supply out of food oil market. Says, "all the CPO plays look good value against the backdrop of an expected bounce in CPO prices;" notes sector median PE multiple of 6.8x for both FY08/FY09. Recommends First Resources for play on biodiesel, undemanding valuation.
Lee Pineapple increasing stake in United Fiber
OCBC's founding Lee family increased its stake in the construction, property forestry and pulp company to 8.65% from 7.14%. Don't know what they see in the syock. But the purchases are providing support. Purchases by Lee Pineapple in Mediaring, failed to stem the slide. I don't see any synergy in the purchases other than for investment purposes.
Thursday, September 11, 2008
Palm oil will average about US$700 if crude oil prices decline
Palm oil will average about US$700 a metric ton over the northern hemisphere winter as crude oil prices decline, according to LMC International Ltd.'s James Fry on 9/9.
Crude oil may trade between US$80 and US$85 a barrel over the winter months, Fry, managing director at the commodity and biofuel research company, told reporters at a conference in Singapore.
Palm and soybean oils, mostly used in food, often follow crude oil as they can be used as biofuels. Crude has tumbled 27% from its Jul 11 record, while the price of palm oil has almost halved from a Mar peak. Palm oil tends to cloud in cold weather, reducing its appeal for use in cooking and fuels.
"Crude oil should fall another $20 from here and that will keep palm oil depressed," Fry said.
"Palm oil has trouble making more sales because of its cold-weather properties."
"We've downgraded our price assumption per ton from US$1,050 to US$900 in '09, and from US$1,100 to US$900 in '10,'' said Merlissa Paramitha Trisno, an analyst at PT Mandiri Sekuritas in Jakarta. "We see a risk of lower crude palm oil prices if the oil falls to belowUS $100 a barrel.''
Palm oil has tumbled 48% from a record 4,486 ringgit a ton in Mar. Soybean oil, palm oil's main rival, has fallen 34% from its peak of 72.69 US cents a pound.
Soybean oil is 56% more expensive than palm oil today, more than double the 12-month average of 23%, according to data on the Bloomberg.
Fry wrongly predicted Sep 23 '07, that prices may touch 2,250 ringgit a ton by Jan of this year as production rose. It averaged 3,226 ringgit in Jan and reached a record 4,486 ringgit in Mar.
On Apr 10, he said palm's gain of 57% in 12 months had been "reasonable" as it was tracking crude prices higher. On Mar 13, Fry predicted the price may average 2,060 ringgit a ton for the full year.
Crude oil may trade between US$80 and US$85 a barrel over the winter months, Fry, managing director at the commodity and biofuel research company, told reporters at a conference in Singapore.
Palm and soybean oils, mostly used in food, often follow crude oil as they can be used as biofuels. Crude has tumbled 27% from its Jul 11 record, while the price of palm oil has almost halved from a Mar peak. Palm oil tends to cloud in cold weather, reducing its appeal for use in cooking and fuels.
"Crude oil should fall another $20 from here and that will keep palm oil depressed," Fry said.
"Palm oil has trouble making more sales because of its cold-weather properties."
"We've downgraded our price assumption per ton from US$1,050 to US$900 in '09, and from US$1,100 to US$900 in '10,'' said Merlissa Paramitha Trisno, an analyst at PT Mandiri Sekuritas in Jakarta. "We see a risk of lower crude palm oil prices if the oil falls to belowUS $100 a barrel.''
Palm oil has tumbled 48% from a record 4,486 ringgit a ton in Mar. Soybean oil, palm oil's main rival, has fallen 34% from its peak of 72.69 US cents a pound.
Soybean oil is 56% more expensive than palm oil today, more than double the 12-month average of 23%, according to data on the Bloomberg.
Fry wrongly predicted Sep 23 '07, that prices may touch 2,250 ringgit a ton by Jan of this year as production rose. It averaged 3,226 ringgit in Jan and reached a record 4,486 ringgit in Mar.
On Apr 10, he said palm's gain of 57% in 12 months had been "reasonable" as it was tracking crude prices higher. On Mar 13, Fry predicted the price may average 2,060 ringgit a ton for the full year.
Palm Oil Must Fall to Boost Biofuel, Food Demand, Mistry Says
Prices of palm oil, the world's most consumed vegetable oil, need to decline further to spur more demand from the biofuel and food sectors as stockpiles swell to records, said yDorab Mistr, director at Godrej International Ltd.
Palm oil would be a viable feedstock for biofuel at 2,200 ringgit a ton (US$636), free-on-board, if crude oil stays around US$100 a barrel and the dollar stabilizes at the current level, Mistry said 10/9 at a conference. Prices would have to fall to US$550 a ton should oil fall to US$80 a
barrel, he said.
Palm oil has fallen 48% from a record on Mar 4 as expectations for bumper crops and swollen stockpiles have curbed demand. Crude has tumbled 29% from its peak.
"High prices have over time evoked a supply response," Mistry said. Record high stockpiles in Indonesia and Malaysiah will weigh on palm oil and "prices have to react and correct,'' he said.
Production will jump to 18 million metric tons in Malaysia and 20 million tons in Indonesia this year as favorable weather aided harvests, he said. Stockpiles in the 2 countries will exceed 5 million tons by the end of November, he said.
Increasing output of other vegetable oils, including soybean oil, the main rival, will add to the glut. China is projected to produce a record 18 million to 19 million tons of soybeans this year, reducing demand from the world's largest buyer, Mistry said.
There will be "bumper crops of oilseeds" around the world after a timely monsoon in India and the latest Hurricane Gustav which brought the "much-needed moisture'' to the developing soybean crop in the U.S. Midwest.
Vegetable oil supply and demand may become "more balanced" in 2008-09 if biofuel producers consume an additional 2.5 million tons and the food sector uses 4 million tons extra, Mistry said.
The U.S. Department of Agriculture will publish its output estimates of soybean crop in a report to be released on Sept. 12. The agency may reduce its soybean crop estimate by 50 million bushels in Sept. 12 report, but even that reduction ``may not affect prices beyond two days,'' Mistry added.
Nov-delivery palm oil rose 1.4% to 2,388 ringgit a tonne on BMD at 3:28 p.m. in Kuala Lumpur.
"It's foolish" to assume the biofuel subsidy in the U.S. and Europe may stoke demand for palm oil, Mistry said.
"Palm diesel must not rely on any subsidy or mandate and it must be cheaper than fossil diesel and make money for producers and blenders" to attract demand from them, he added.
Godrej International is one of India's biggest importers of vegetable oils, and Mistry has traded the commodity for more than 3 decades.
Palm oil would be a viable feedstock for biofuel at 2,200 ringgit a ton (US$636), free-on-board, if crude oil stays around US$100 a barrel and the dollar stabilizes at the current level, Mistry said 10/9 at a conference. Prices would have to fall to US$550 a ton should oil fall to US$80 a
barrel, he said.
Palm oil has fallen 48% from a record on Mar 4 as expectations for bumper crops and swollen stockpiles have curbed demand. Crude has tumbled 29% from its peak.
"High prices have over time evoked a supply response," Mistry said. Record high stockpiles in Indonesia and Malaysiah will weigh on palm oil and "prices have to react and correct,'' he said.
Production will jump to 18 million metric tons in Malaysia and 20 million tons in Indonesia this year as favorable weather aided harvests, he said. Stockpiles in the 2 countries will exceed 5 million tons by the end of November, he said.
Increasing output of other vegetable oils, including soybean oil, the main rival, will add to the glut. China is projected to produce a record 18 million to 19 million tons of soybeans this year, reducing demand from the world's largest buyer, Mistry said.
There will be "bumper crops of oilseeds" around the world after a timely monsoon in India and the latest Hurricane Gustav which brought the "much-needed moisture'' to the developing soybean crop in the U.S. Midwest.
Vegetable oil supply and demand may become "more balanced" in 2008-09 if biofuel producers consume an additional 2.5 million tons and the food sector uses 4 million tons extra, Mistry said.
The U.S. Department of Agriculture will publish its output estimates of soybean crop in a report to be released on Sept. 12. The agency may reduce its soybean crop estimate by 50 million bushels in Sept. 12 report, but even that reduction ``may not affect prices beyond two days,'' Mistry added.
Nov-delivery palm oil rose 1.4% to 2,388 ringgit a tonne on BMD at 3:28 p.m. in Kuala Lumpur.
"It's foolish" to assume the biofuel subsidy in the U.S. and Europe may stoke demand for palm oil, Mistry said.
"Palm diesel must not rely on any subsidy or mandate and it must be cheaper than fossil diesel and make money for producers and blenders" to attract demand from them, he added.
Godrej International is one of India's biggest importers of vegetable oils, and Mistry has traded the commodity for more than 3 decades.
Tuesday, September 9, 2008
Straits Asia locked in good price rises for '09
Straits Asia headed higher as beaten-down commodity plays among best performers in today''s market rally. Thermal coal miner has grappled with weak sentiment recently on worries over falling commodity prices, but Macquarie says company locked in good price rises for next year. Broker says channel checks indicate company locked in 5.5 m tons '09 production at US$110/ton vs '08 price of US$70; "given that 50% of '09 production has been locked in at prices of US$110/ton, we believe a re-rating in the stock is overdue." Maintains Outperform call, $5.10 target price.
Friday, September 5, 2008
Malaysian CPO futures on 4 Sep '08
Malaysian CPO futures advanced for the first time in 3 days on speculation this week's price decline will boost demand and a rally in crude oil may raise the appeal for the commodity as an alternative fuel. Palm oil for Nov delivery added as much as 2.6% to 2,515 ringgit (US$734) a tonne on BMD before closing at 2,510 ringgit.
"It's a technical correction in the palm oil market" after recent declines, Merlissa Baramitha, an analyst with PT Mandiri Sekuritas in Jakarta, said.
The futures contract has tumbled 45% from a record 4,486 ringgit on Mar 4 amid concerns that global supply may exceed demand and as funds cut commodity investments.
Palm oil prices may rebound 30-40% over the next 6 months on rising biofuel demand and slowing production, boosting shares of Wilmar International and Malaysia's IOI Corp., Goldman Sachs said.
"Near-term crude palm oil fundamentals are bearish, due to high inventory levels in Malaysia, but we believe this is already priced in,'' with rates at a 40% discount to soybean oil, Goldman analysts Patrick Tiah and Nikhil Bhandari said today in a report. That's twice the long-term average discount of 20%.
"My expectation is for palm oil futures by the end of Dec to be trading between 2,700 and 2,900 ringgit because of strong demand and tighter supplies,'' Thomas Mielke, chief editor of OilWorld said an interview today at a conference in Siem Reap, Cambodia.
Meantime, Bursa Malaysia Bhd. said it will start offering U.S. dollar-denominated palm oil futures contracts tomorrow. The contract, called FUPO, will be cash-settled, the exchange said.
"It's a technical correction in the palm oil market" after recent declines, Merlissa Baramitha, an analyst with PT Mandiri Sekuritas in Jakarta, said.
The futures contract has tumbled 45% from a record 4,486 ringgit on Mar 4 amid concerns that global supply may exceed demand and as funds cut commodity investments.
Palm oil prices may rebound 30-40% over the next 6 months on rising biofuel demand and slowing production, boosting shares of Wilmar International and Malaysia's IOI Corp., Goldman Sachs said.
"Near-term crude palm oil fundamentals are bearish, due to high inventory levels in Malaysia, but we believe this is already priced in,'' with rates at a 40% discount to soybean oil, Goldman analysts Patrick Tiah and Nikhil Bhandari said today in a report. That's twice the long-term average discount of 20%.
"My expectation is for palm oil futures by the end of Dec to be trading between 2,700 and 2,900 ringgit because of strong demand and tighter supplies,'' Thomas Mielke, chief editor of OilWorld said an interview today at a conference in Siem Reap, Cambodia.
Meantime, Bursa Malaysia Bhd. said it will start offering U.S. dollar-denominated palm oil futures contracts tomorrow. The contract, called FUPO, will be cash-settled, the exchange said.
Wimar down on cut in target price and closure of commodities-focused hedge fund
Goldman Sachs cuts Wilmar target price to $4.90 from $6.40; maintains Buy rating. Broker says target price cut due to lower assumed valuation multiple for plantation business, to bring it in line with peer IOI Corp.; now assumes 16X FY09 PE multiple for plantations business vs 25X previously.
But broker says Wilmar remains top pick in Asian palm sector; "Wilmar should be a core holding for long-term investors as it offers high-quality, high-growth exposure to the palm oil sector, given market leadership in its downstream businesses and strong organic growth potential." Adds, while many palm companies have seen earnings cuts on back of lower palm oil prices, Wilmar has not, thanks to strong downstream margins on back of lower palm feedstock prices.
Singapore commodity plays leading blue chip losers as retreating oil price weighs, raises fears of cooling commodity cycle; Noble, Olam, Straits Asia Res and Wilmar are all down.
"Oil, which has been the poster boy for the commodities rally in 1H08 has fallen below the 200-day MA support at around US$115 per barrel," says DBS Vickers. Adds, news Ospraie Management will close commodities fund due to losses in energy, mining and natural resources equity holdings also likely to hit sentiment. "Our negative view on commodity related plays remains unchanged," broker says.
Funds are likely to hold big commodity stocks, so they'll be more affected than smaller players.
Shares may have further downside risk, particularly if oil continues to come off.
But broker says Wilmar remains top pick in Asian palm sector; "Wilmar should be a core holding for long-term investors as it offers high-quality, high-growth exposure to the palm oil sector, given market leadership in its downstream businesses and strong organic growth potential." Adds, while many palm companies have seen earnings cuts on back of lower palm oil prices, Wilmar has not, thanks to strong downstream margins on back of lower palm feedstock prices.
Singapore commodity plays leading blue chip losers as retreating oil price weighs, raises fears of cooling commodity cycle; Noble, Olam, Straits Asia Res and Wilmar are all down.
"Oil, which has been the poster boy for the commodities rally in 1H08 has fallen below the 200-day MA support at around US$115 per barrel," says DBS Vickers. Adds, news Ospraie Management will close commodities fund due to losses in energy, mining and natural resources equity holdings also likely to hit sentiment. "Our negative view on commodity related plays remains unchanged," broker says.
Funds are likely to hold big commodity stocks, so they'll be more affected than smaller players.
Shares may have further downside risk, particularly if oil continues to come off.
Gartner Research and Moody's don't see meaningful recovery in semiconductor sector until well into '09
Research firm Gartner Inc. (IT) has reduced its 2008 and 2009 revenue growth forecast for the semiconductor industry and doesn't expect the sector to recover until the second half of next year.
"We''re at a crossroads," said Gartner Research Director John Barber during the firm's semiconductor roadshow in Singapore Sep 2. "We''re seeing weakness in the market we didn't see in the first half (of the year)."
He said that while the semiconductor industry performed relatively well in the first half of the year behind strong growth in personal computers and handsets, deteriorating global economic conditions are starting to diminish consumer buying power around the world.
Gartner now expects the semiconductor industry revenue to grow 4.2% from 2007 to US$285 billion, down from a previous forecast for 4.6% growth to US$287 billion. Revenue for 2009 is expected to grow 7.8% from 2008 to US$308 billion, down from 7.9% growth to US$309 billion forecast earlier.
"We are starting to see the strength of consumer demand for PC and handsets starting to weaken," Barber said, adding that the forecasts could be adjusted further should macroeconomic conditions continue to deteriorate.
Falling demand, rising margin pressures and increasing competitive pressures will also fuel further merger and acquisition activities, he said, as companies fight for a foothold in the market.
Barber also said a market recovery for dynamic random access memory, or DRAM, and NAND flash memory chips is unlikely until 2010 due to anticipated weakness in consumer demand and oversupply. He said demand for DRAM, widely used for PCs, will remain weak until the mass adoption of 64-bit operating systems that require more memory begins.
Adverse market conditions for NAND chips, used in digital cameras and MP3 players, are further compounded as major players like Samsung Electronics continue to add capacity to take further market share, Barber said.
"We''ve seen in the past some guys willing to lose money for market share," he said. "We could possibly see that again."
Gartner research vice president Philip Koh says global economic slowdown weakening consumer demand for PCs and handsets, hurting overall demand for semiconductors. "Even though computer makers plan to launch more low-cost netbooks, consumers will refrain from buying new PCs or replacing old ones, as their confidence in the economy is weak," says Koh.
He does not think demand for chips will pick up until 2H09 when global economy may turn around.
Moody's sets negative rating outlook for Asia Pacific's technology, semiconductor sectors over next 12-18 months.
"This outlook reflects mainly the pressures apparent on profitability due to the severer-than-normal downturn in prices for DRAM chips and NAND flash memory," says Moody''s analyst Ken Chan. "Profitability for the foundries as well as the outsourced semiconductor assembly and testing (OSAT) sectors is being undermined by lower average selling prices, foreign-exchange volatility, and higher costs for raw materials and utilities."
Moody''s says it doesn't see meaningful recovery until well into 2009. Notes Asian technology, semiconductor sectors have also yet to feel full impact of economic slowdown in US, Europe, Japan.
"We''re at a crossroads," said Gartner Research Director John Barber during the firm's semiconductor roadshow in Singapore Sep 2. "We''re seeing weakness in the market we didn't see in the first half (of the year)."
He said that while the semiconductor industry performed relatively well in the first half of the year behind strong growth in personal computers and handsets, deteriorating global economic conditions are starting to diminish consumer buying power around the world.
Gartner now expects the semiconductor industry revenue to grow 4.2% from 2007 to US$285 billion, down from a previous forecast for 4.6% growth to US$287 billion. Revenue for 2009 is expected to grow 7.8% from 2008 to US$308 billion, down from 7.9% growth to US$309 billion forecast earlier.
"We are starting to see the strength of consumer demand for PC and handsets starting to weaken," Barber said, adding that the forecasts could be adjusted further should macroeconomic conditions continue to deteriorate.
Falling demand, rising margin pressures and increasing competitive pressures will also fuel further merger and acquisition activities, he said, as companies fight for a foothold in the market.
Barber also said a market recovery for dynamic random access memory, or DRAM, and NAND flash memory chips is unlikely until 2010 due to anticipated weakness in consumer demand and oversupply. He said demand for DRAM, widely used for PCs, will remain weak until the mass adoption of 64-bit operating systems that require more memory begins.
Adverse market conditions for NAND chips, used in digital cameras and MP3 players, are further compounded as major players like Samsung Electronics continue to add capacity to take further market share, Barber said.
"We''ve seen in the past some guys willing to lose money for market share," he said. "We could possibly see that again."
Gartner research vice president Philip Koh says global economic slowdown weakening consumer demand for PCs and handsets, hurting overall demand for semiconductors. "Even though computer makers plan to launch more low-cost netbooks, consumers will refrain from buying new PCs or replacing old ones, as their confidence in the economy is weak," says Koh.
He does not think demand for chips will pick up until 2H09 when global economy may turn around.
Moody's sets negative rating outlook for Asia Pacific's technology, semiconductor sectors over next 12-18 months.
"This outlook reflects mainly the pressures apparent on profitability due to the severer-than-normal downturn in prices for DRAM chips and NAND flash memory," says Moody''s analyst Ken Chan. "Profitability for the foundries as well as the outsourced semiconductor assembly and testing (OSAT) sectors is being undermined by lower average selling prices, foreign-exchange volatility, and higher costs for raw materials and utilities."
Moody''s says it doesn't see meaningful recovery until well into 2009. Notes Asian technology, semiconductor sectors have also yet to feel full impact of economic slowdown in US, Europe, Japan.
Thursday, September 4, 2008
Soyoil's premium to palm oil may halve
Palm oil climbed after Godrej International's Dorab Mistry said soybean oil's premium to the tropical oil may halve, spurring buying from investors looking for a bounce in prices.
Soybean oil's premium to palm oil, the widest in more than 6 years, may narrow as output of palm oil peaks in Indonesia and Malaysia and a price plunge lures buyers, said Mistry, who has traded vegetable oils for more than three decades.
Soybean oil was around 56% more expensive than the tropical oil. The gap widened to 69% on Aug 26, the most since at least Jan '02, according to data compiled by Bloomberg.
"Demand for palm oil is bound to emerge as it is a lot cheaper," Alvin Tai, analyst at OSK Research Bhd. said by phone from Kuala Lumpur. "One can make money using palm oil to make bio-fuel until palm is available at 2,900 ringgit.''
Palm oil has declined 14% this year, while soybean oil has gained almost 10% after supply from Argentina, the world's largest exporter, was curbed during a 4-month strike by farmers over the Mar increase in export taxes.
That's made crude palm oil US$470 a tonne cheaper than soybean oil, Sunaina Dhanuka, analyst at Macquarie Securities, said in a report. The gap relative to both soybean and rapeseed oils is at an "all-time high," she said. Still, prices may not exceed US$1,000 a ton in the medium term due because of a favourable supply outlook, she said.
Soybean oil's premium to palm oil, the widest in more than 6 years, may narrow as output of palm oil peaks in Indonesia and Malaysia and a price plunge lures buyers, said Mistry, who has traded vegetable oils for more than three decades.
Soybean oil was around 56% more expensive than the tropical oil. The gap widened to 69% on Aug 26, the most since at least Jan '02, according to data compiled by Bloomberg.
"Demand for palm oil is bound to emerge as it is a lot cheaper," Alvin Tai, analyst at OSK Research Bhd. said by phone from Kuala Lumpur. "One can make money using palm oil to make bio-fuel until palm is available at 2,900 ringgit.''
Palm oil has declined 14% this year, while soybean oil has gained almost 10% after supply from Argentina, the world's largest exporter, was curbed during a 4-month strike by farmers over the Mar increase in export taxes.
That's made crude palm oil US$470 a tonne cheaper than soybean oil, Sunaina Dhanuka, analyst at Macquarie Securities, said in a report. The gap relative to both soybean and rapeseed oils is at an "all-time high," she said. Still, prices may not exceed US$1,000 a ton in the medium term due because of a favourable supply outlook, she said.
Consumption of palm oil in China and India still strong
Palm oil averaged 3,513 ringgit (US$1,054) a tonne in Q2, 44% higher than the year-earlier quarter.
Consumption of palm oil in China, the world's largest palm oil buyer, was still growing at about 19% a year, Golden Agri's Chairman and CEO Widjaja said, matching the rate reported by the Beijing-based Customs General Administration for the first 6 months.
India, the 2nd-biggest buyer of vegetable oils, imported 3.09 m tonnes of edible oils, including palm oil in the 8 months ended Jun, according to the Solvent Extractors' Association. That's 13% more than a year earlier.
Consumption of palm oil in China, the world's largest palm oil buyer, was still growing at about 19% a year, Golden Agri's Chairman and CEO Widjaja said, matching the rate reported by the Beijing-based Customs General Administration for the first 6 months.
India, the 2nd-biggest buyer of vegetable oils, imported 3.09 m tonnes of edible oils, including palm oil in the 8 months ended Jun, according to the Solvent Extractors' Association. That's 13% more than a year earlier.
Biodiesel manufacturers are making quite good margins
Palm oil prices have reached a "bottom' and will be supported by declining supplies and increasing demand for biodiesel, Derom Bangun, chairman of the Indonesia Palm Oil Association, said.
Prices of the cooking oil reached US$825 a tonne on a cost-and- freight basis in the port of Rotterdam around 17 Aug, or about US$750 a tonne in Malaysia, Bangun said in an interview with Bloomberg Television on 27 Aug.
"Supply will get tight in the long term and prices of palm oil may rise in the fourth quarter," Miang Chuen Koh, analyst at Morgan Stanley Asia (S), said by phone 27/8. "Demand will pick up from the food side as well as biodiesel."
"Recently prices dropped from over US$1,200 a ton in Rotterdam to US$825," Bangun said. "Last week prices rebounded to US$880-$900 although they fell again yesterday to US$860. Prices will remain there and are not going further down."
Output will decline after the peak production season in Malaysia and Indonesia ends in Sep, Bangun said.
"What happens now is a kind of temporary oversupply'' as traders and processors built up excessive inventory at high prices without noticing weakening demand, he said. "That's why for some time they don't buy any more palm oil, causing prices to drop to such a low level."
The Indonesia Palm Oil Association is an organization of crude palm oil producers, consisting of state-owned and non- state plantations, foreign-owned plantations and cooperatives of oil-palm growers.
Malaysia is trying to "ensure there is no oversupply," Plantation Industries and Commodities Minister Peter Chin Fah Kui said in an interview 26/8. "We're encouraging the industry to clear their stocks and asking companies not to import" crude palm oil from other countries like Indonesia.
The country's stockpiles reached a record 2.04 m tonnes in Jun before declining to 1.98 m tonnes in Jul, according to the Malaysian Palm Oil Board.
"Making biofuel from palm oil has become economically viable now,'' Alvin Tai, analyst at OSK Research Bhd., said by phone from Kuala Lumpur.
Biodiesel manufacturers can break even with crude oil priced at the current level and palm oil at 2,900 ringgit, Tai said. "So you can see they are having quite good margins now" with palm oil trading below 2,500 ringgit a tonne.
Golden Agri-Resources, a unit of Indonesia's largest oil-palm grower, Sinar Mas Group, is looking at a possible mandate from the government to use the product in blended fuels, Chairman and CEO Franky Widjaja said Aug 12. The company doesn't make biodiesel yet.
"If the Indonesian government were to mandate for a 3% compulsory blend of biodiesel, that's equivalent to 550,000 tons of palm oil demand,'' Widjaja said. "If the government were to mandate 5%, that's equivalent to 900,000 tons."
Prices of the cooking oil reached US$825 a tonne on a cost-and- freight basis in the port of Rotterdam around 17 Aug, or about US$750 a tonne in Malaysia, Bangun said in an interview with Bloomberg Television on 27 Aug.
"Supply will get tight in the long term and prices of palm oil may rise in the fourth quarter," Miang Chuen Koh, analyst at Morgan Stanley Asia (S), said by phone 27/8. "Demand will pick up from the food side as well as biodiesel."
"Recently prices dropped from over US$1,200 a ton in Rotterdam to US$825," Bangun said. "Last week prices rebounded to US$880-$900 although they fell again yesterday to US$860. Prices will remain there and are not going further down."
Output will decline after the peak production season in Malaysia and Indonesia ends in Sep, Bangun said.
"What happens now is a kind of temporary oversupply'' as traders and processors built up excessive inventory at high prices without noticing weakening demand, he said. "That's why for some time they don't buy any more palm oil, causing prices to drop to such a low level."
The Indonesia Palm Oil Association is an organization of crude palm oil producers, consisting of state-owned and non- state plantations, foreign-owned plantations and cooperatives of oil-palm growers.
Malaysia is trying to "ensure there is no oversupply," Plantation Industries and Commodities Minister Peter Chin Fah Kui said in an interview 26/8. "We're encouraging the industry to clear their stocks and asking companies not to import" crude palm oil from other countries like Indonesia.
The country's stockpiles reached a record 2.04 m tonnes in Jun before declining to 1.98 m tonnes in Jul, according to the Malaysian Palm Oil Board.
"Making biofuel from palm oil has become economically viable now,'' Alvin Tai, analyst at OSK Research Bhd., said by phone from Kuala Lumpur.
Biodiesel manufacturers can break even with crude oil priced at the current level and palm oil at 2,900 ringgit, Tai said. "So you can see they are having quite good margins now" with palm oil trading below 2,500 ringgit a tonne.
Golden Agri-Resources, a unit of Indonesia's largest oil-palm grower, Sinar Mas Group, is looking at a possible mandate from the government to use the product in blended fuels, Chairman and CEO Franky Widjaja said Aug 12. The company doesn't make biodiesel yet.
"If the Indonesian government were to mandate for a 3% compulsory blend of biodiesel, that's equivalent to 550,000 tons of palm oil demand,'' Widjaja said. "If the government were to mandate 5%, that's equivalent to 900,000 tons."
Malaysian CPO futures on 3 Sep '08 and OilWorld forecast.
Malaysian CPO futures in fell for a second day, erasing earlier gains, as the fourth day of declines in crude oil prices reduced the appeal of the tropical commodity as feedstock for alternative energy. Palm oil for Nov fell 33 ringgit, or 1.3%, to close at 2,451 ringgit (US$712) a tonne on BMD.
"Palm oil prices are currently undervalued,'' Thomas Mielke, chief editor of OilWorld, the trade publication, said from Siem Reap, Cambodia. "At this level, palm oil consumption for energy is set to rise sharply."
Still, "palm oil prices will rebound in the fourth quarter,'' Tan Ting Min, a research analyst at Credit Suisse, wrote in a report today. "Malaysian palm oil exports in Aug grew to hit an all-time high, driven primarily by a strong pick-up in exports to India and Pakistan ahead of the festive seasons.''
"We expect a pick-up in Sep,'' wrote Tan. "Palm oil exports to the Middle Eastern countries should also be higher ahead of the festive season.''
Palm oil may average 7.6% more in the year ending Jun '09 because of increased demand for biofuel, said OilWorld's Thomas Mielke.
The tropical commodity may average US$1,120 a tonne, up from US $1,041 a tonne the previous year, Mielke said.
Increased demand for the tropical oil as feedstock for biofuel would support palm oil prices unless crude oil prices declined, he said.
Argentine soybean oil may average US$1,250 a tonne in the year ending Jun, up from US$1,105 a tonne the previous year, he said.
"Palm oil will be rising less than the soybean oil as there's less supply issues in palm oil than in the soybeans,'' he said.
"Palm oil prices are currently undervalued,'' Thomas Mielke, chief editor of OilWorld, the trade publication, said from Siem Reap, Cambodia. "At this level, palm oil consumption for energy is set to rise sharply."
Still, "palm oil prices will rebound in the fourth quarter,'' Tan Ting Min, a research analyst at Credit Suisse, wrote in a report today. "Malaysian palm oil exports in Aug grew to hit an all-time high, driven primarily by a strong pick-up in exports to India and Pakistan ahead of the festive seasons.''
"We expect a pick-up in Sep,'' wrote Tan. "Palm oil exports to the Middle Eastern countries should also be higher ahead of the festive season.''
Palm oil may average 7.6% more in the year ending Jun '09 because of increased demand for biofuel, said OilWorld's Thomas Mielke.
The tropical commodity may average US$1,120 a tonne, up from US $1,041 a tonne the previous year, Mielke said.
Increased demand for the tropical oil as feedstock for biofuel would support palm oil prices unless crude oil prices declined, he said.
Argentine soybean oil may average US$1,250 a tonne in the year ending Jun, up from US$1,105 a tonne the previous year, he said.
"Palm oil will be rising less than the soybean oil as there's less supply issues in palm oil than in the soybeans,'' he said.
Wednesday, September 3, 2008
Malaysian CPO futures on 2 Sep '08
Malaysian CPO futures dropped as crude oil plunged, reducing demand for alternative fuel made from vegetable oils, including the tropical commodity. Palm oil for Nov delivery slumped 5.2% to 2,484 ringgit (US$725) per tonne on BMD, the most since Aug 26. Earlier, the futures fell as low as 2,434 ringgit, extending a 14% decline in Aug, the second straight monthly drop.
Crude oil drove the palm oil market down "and it's really a function partly of the dollar's strength that is driving oil prices and commodities lower," said James Gruber, an analyst at CLSA Asia Pacific Markets in Jakarta. "Secondly, there's demand concern due to weakening economic growth globally."
Palm oil may fall to less than 2,425 ringgit (US$709) a tonne if crude falls below US$100 a barrel, Malaysian Plantation Industries and Commodities Minister Peter Chin Fah Kui said.
If "petroleum is going to come down further, there will be a chance that palm oil will also follow because the graph tracks each other," Chin told reporters today in Kuala Lumpur. Still, the current range of 2,500 ringgit to 3,000 ringgit would be "comfortable" for growers, he said, echoing recent comments.
"In the near term, palm oil will continue to track crude oil prices," said James Ratnam, an analyst at TA Securities Holdings Bhd. in Kuala Lumpur. Chin's forecast "makes sense," he said.
The decline in palm oil prices may prompt the government to review a special tax on domestic producers such as IOI Corp. and Sime Darby Bhd. as the band in which the levy is payable has narrowed, hurting collection, Chin said.
Planters, who pay the tax when they sell palm oil at more than 2,000 ringgit a tonne, want the threshold raised because their production costs have risen. The tax is charged based on the difference between the current price and the 2,000 ringgit level.
Malaysia Aug palm Oil exports up despite defaults. Exports rose 8% in Aug, compared with the previous month, according to independent surveyor Intertek. A total of 1.49 m tonnes of palm oil exports were tracked in Aug, Intertek said. Another cargo surveyor SGS (Malaysia) Bhd. said Malaysia's palm oil exports rose 6.6% on month in Aug to 1.49 m tonnes.
Crude oil drove the palm oil market down "and it's really a function partly of the dollar's strength that is driving oil prices and commodities lower," said James Gruber, an analyst at CLSA Asia Pacific Markets in Jakarta. "Secondly, there's demand concern due to weakening economic growth globally."
Palm oil may fall to less than 2,425 ringgit (US$709) a tonne if crude falls below US$100 a barrel, Malaysian Plantation Industries and Commodities Minister Peter Chin Fah Kui said.
If "petroleum is going to come down further, there will be a chance that palm oil will also follow because the graph tracks each other," Chin told reporters today in Kuala Lumpur. Still, the current range of 2,500 ringgit to 3,000 ringgit would be "comfortable" for growers, he said, echoing recent comments.
"In the near term, palm oil will continue to track crude oil prices," said James Ratnam, an analyst at TA Securities Holdings Bhd. in Kuala Lumpur. Chin's forecast "makes sense," he said.
The decline in palm oil prices may prompt the government to review a special tax on domestic producers such as IOI Corp. and Sime Darby Bhd. as the band in which the levy is payable has narrowed, hurting collection, Chin said.
Planters, who pay the tax when they sell palm oil at more than 2,000 ringgit a tonne, want the threshold raised because their production costs have risen. The tax is charged based on the difference between the current price and the 2,000 ringgit level.
Malaysia Aug palm Oil exports up despite defaults. Exports rose 8% in Aug, compared with the previous month, according to independent surveyor Intertek. A total of 1.49 m tonnes of palm oil exports were tracked in Aug, Intertek said. Another cargo surveyor SGS (Malaysia) Bhd. said Malaysia's palm oil exports rose 6.6% on month in Aug to 1.49 m tonnes.
Qualitas Medical's valuation is hefty
Players are turned off by Qualitas Medical's high valuation. IPO price of $0.25 translates to P/E of 27.8X. Pullback in broad market also weighing on stock. Despite dismal performance, OCBC says Malaysia-based clinic chain still has attractive traits. Notes "critical mass" of doctors (from 89 clinics, 63 affiliate clinics) makes company attractive when it comes to seeking contracts from corporate employers, multinational corporations; "Qualitas will also be a candidate that comes to mind for small private clinics seeking to join or become affiliated with a larger group."
IPO of 22 m shares 1.0X subscribed.
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