KUALA LUMPUR (Feb 24): The Bursa Malaysia Plantation Index and the FBM Palm Oil Plantation-NC Index have emerged among the local bourse’s top performing indices in the morning session as selected index heavyweight stocks gained on rising crude palm oil (CPO) price.

The Bursa Malaysia Plantation index, which rose as much as 235.02 points or 2.99% to 8,105.06 in early trade, pared some gains at 8,020.39 at noon market break. Still, it was up 150.35 points or 1.91%. 

Meanwhile, the FBM Palm Oil Plantation-NC index increased 293.12 points or 2.31% to 12,971.55, after surging as high as 420.67 points or 3.32% to 13,099.1.

In comparison, the FBM KLCI was down 14.45 points or 0.91% to 1,571.69.

Index heavyweight Sime Darby Plantation Bhd emerged among the top gainers on the local bourse as its share price added 20 sen or 4.3% to RM4.85, giving it a market capitalisation of RM33.54 billion.

Other plantation companies that were among the top gainers on local bourse were Genting Plantations Bhd and Hap Seng Plantations Holdings Bhd. The share price of Genting Plantations jumped 37 sen or 4.4% to RM8.77, while Hap Seng Plantations gained 28 sen or 11.91% to RM2.63.

Global financial data provider Refinitiv issued a report on Feb 22 saying that tight palm oil supplies continue to lift prices to an unprecedented level, compounded by government policies and gains in external energy and edible oil markets, extending the palm rally.

“On the external front, noticeable gains in soybean prices and [rise in] crude oil prices last month had also fuelled the bull run. Weather concerns and a lack of offers from sellers remain the theme for the soybean market. Soybean prices remain firm in response to uncertainties over soybean output. Despite increased rains in parts of South America, soybean crop conditions remain poor in Southern Brazil and Argentina, while flooding in parts of the low-lying areas also caused crop damage,” said Refinitiv.

It added that geopolitical tensions seen recently with the Ukraine-Russian conflict have also kept crude oil and Black Sea sunflower seed oil prices elevated, prompting a spill-over effect on rival oils including palm oil and soybean oil, fuelling food inflation.

Meanwhile, the report highlighted that Indonesia’s new palm oil export regulations, such as Domestic Market Obligation (DMO), had lifted Malaysia CPO futures and palm complex prices amid export uncertainties.

It also noted that Indonesian CPO free on board (FOB) prices were lifted to an all-time high level at US$1,485 (RM6,231.06) in January, negatively affecting demand from key destinations like India, China, and many other key consuming countries.

“However, high prices have essentially curbed buying. If key destinations slow down palm oil purchases and production picks up in the months ahead, we expect ending stocks build-up in 2Q, weighing on the palm market. Competitive soft oil pricing will also prompt greater competition,” it warned.

Looking ahead, the report said the developments of labour shortages in Malaysia, Indonesia palm oil exports, Omicron wave, soybean developments in South America and persistent weather concerns led by La Niña across Southeast Asia to South America remain some of the key swing drivers.