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The question that we have to ask is can CPO price sustain at the current price? Or will it fall back. The Plantation industry has never been a long term investment due to a number of factors, such as currency, El Nino, La Nina, CPO production, demand for CPO, trade war and government policy. Hence, each of the factors will have an effect on the CPO price as well as the profitability of the plantation companies. We have decided to analyse if CPO Price can sustain at above 2600/ 2700 level for the next couple of months or will it go beyond 3000?
We have done some research and have shared on some of the past data for investors to decide and what should investors be aware of when investing in a plantation company; and identifying the trend before even everyone does (basically, don’t get into a FOMO – fear of mission out situation).
2.0 Relationship betwen SoyBean Oil and CPO Price
3.0 Correlation between USD and CPO Price
Understand the correlation between USD and CPO Price. USD has been depreciating against MYR since the beginning of April 2020. Based on historical data, whenever there is a drop in USD against MYR, CPO price will tend to trend upwards. For instance, back in December 2020, when USD depreciated from 4.25 to 4.10 against the MYR, CPO price climbed to RM 3,000.00 per tonne.
3.0 USD and MYR Exchange Rate for the past 6 months
4.0 Relationship between Export Quantity, Stock Level and CPO Price
Upon understanding the reason why CPO Price is increasing steadily and by analysing some of the above factors, we will be a more informed investor and could estimate what will be the CPO price moving forward. Subsequently, we will proceed to do a review on some of the plantation companies in Malaysia in terms of their production efficiencies and some basic fundamentals.
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