KUALA LUMPUR: Plantation counters rallied yesterday as crude palm oil (CPO) futures hit another multi-year high.

In fact, seven out of the top 10 gainers on Bursa Malaysia were plantation or plantation-related counters.

The FBM Palm Oil Index rose 362.03 points or 2.67% to 13,905.22 points, outperforming the FBM KLCI, which gained just 0.05%.

Yesterday, CPO futures for third-month delivery rose RM66 per tonne to RM3,070, a 27-month high. Meanwhile, crude oil added 82 US cents per barrel to US$82.51; gold jumped US$10.40 an ounce to US$1,338.85 while the ringgit strengthened 0.63% to 3.0950 versus the US dollar.

Among the local planters, United Plantations Bhd was the top gainer in the sector as well as on Bursa Malaysia, gaining 60 sen to close at RM17 yesterday.

This was followed by Kuala Lumpur Kepong Bhd, whose share price increased 44 sen to close at RM18.94.

Other planters that also made it to Bursa’s top 10 gainers’ list yesterday were TSH Resources Bhd (up 40 sen to RM2.79), Negri Sembilan Oil Palms Bhd (up 30 sen to RM5.30), Boustead Holdings Bhd (up 29 sen to RM5.95), Rimbunan Sawit Bhd (up 23 sen to RM1.90), and Tradewinds Plantation Bhd (up 22 sen to RM2.39).

While not on the top gainers’ list, IJM Plantations Bhd yesterday hit a 52-week high when its stock price reached RM2.81 during intra-day trading, but closed the day at RM2.78, a seven-sen increase.

Tradewinds Plantations also hit a 52-week high when its share price reached RM2.40, but closed at RM2.39, up 22 sen for the day.

Nonetheless, IOI Corporation Bhd only closed one sen higher at RM5.80, while Genting Plantations Bhd rose a moderate nine sen to close at RM8.53. Plantation giant Sime Darby Bhd registered a marginal two-sen gain to close at RM8.84 yesterday.

Across the Causeway, major plantation counters also registered gains, with Wilmar International Ltd registering an increase of seven cents to close at S$6.47 (RM15.49) while Kencana Agri Ltd closed at 42 cents, up one cent.

In Indonesia, Astra Agro Lestari TBK PT also saw an increase of 1,500 rupiah to close at 25,800 rupiah.It hit a 52-week high of 26,050 rupiah during trading.

Investors were expecting CPO prices to continue strengthening towards year-end due to seasonal tightness in supply. However, there is a mixed outlook for CPO prices in 2011.
“We expect palm-oil prices to strengthen seasonally at year-end, but remain bearish on palm-oil prices for 2011,” said Credit Suisse in a report.

The report said while palm-oil prices in US dollar had risen 16% year-to-date, palm-oil prices in Malaysian ringgit (MYR) and Indonesian rupiah (IDR) had gone up only 6% and 9%, respectively, because the MYR and IDR had appreciated 11% and 5%, respectively, against the US dollar.

“The stronger MYR and IDR have not benefited palm-oil stocks,” said Credit Suisse.

The report also indicated that Malaysian palm-oil exports had risen 6.2% year-on-year, driven by exports to the EU (+19.8%) and Pakistan (+19.7%), while exports to China and India have fallen 8.1% and 3.6%, respectively.

“We believe the strong month-on-month exports may mean Malaysia’s palm-oil inventories for September should fall month-on-month, as harvesting of fresh fruit bunch was probably disrupted by the holiday season.

Nonetheless, we expect Malaysia’s palm-oil inventories to trend up from October onwards,” said Credit Suisse.

This article appeared in The Edge Financial Daily, October 26, 2010.