A POWERFUL BULL RUN IS GETTING CLEARER AND CLEARER BY GOOD TO EXCELLENT RESULTS OF PALM OIL COMPANIES, Calvin Tan Research
Hi guys,
Yesterday 2 more Pantation Companies reported their Nov 2020 results
CEPATWAWASAN - UP A WHOPPING 385% YOY
AND LOOK AT IOI REPORT
Prospects
Crude palm oil (“CPO”) price has increased sharply, reaching a 8-year high in November this year. CPO price is expected to remain high – more than RM3,000 a ton until February 2021, due to low palm oil inventory and seasonal low crop production until early next year, although its narrowing price discount against other competing vegetable oils and the coming winter in the Northern Hemisphere will dampen its demand.
For our plantation segment, oil palm crop production is expected to decline until January or February 2021 due to the low production season. Although the operations in the plantations are not directly affected by the Conditional Movement Control Order (“CMCO”)’s restrictions, the freeze on new intake of foreign workers by the government has resulted in labour shortage which has become more severe as months go by. Nevertheless, due to the strong palm oil price forecasted until February 2021, we expect good financial performance from our plantation segment at least for Q2 and Q3 of FY2021.
For the refinery and commodity marketing sub-segment within our resource-based manufacturing segment, the refining and fractionation margins are expected to be negative or near breakeven due to the high CPO price and lower sales during the winter months in the Northern Hemisphere.
As for the oleochemical sub-segment, the rapid rise in palm kernel oil (“PKO”) and palm stearin prices recently will affect the products margins and profit. Sales volume is not expected to be materially affected due to the healthy demand from the soap and personal hygiene industries and the growth in China’s economy, although the new wave of the COVID-19 infection cases in Europe will affect the economy there.
In our specialty fats sub-segment comprising our associate company Bunge Loders Croklaan, the high palm oil price and the new wave of COVID-19 cases in Europe are expected to similarly affect its performance. However, the demand for snack food consumed at homes is expected to remain strong in USA and parts of Asia.
US Dollar is expected to remain soft after the election of Joe Biden as the new President of America, as concerns over the US-China and US-Europe trade wars wane. This will result in less fluctuation in the translation gain or loss on our USD-denominated borrowings.
Due to the strong palm oil price, the Group’s financial performance for Q2 and Q3 of FY2021 is expected to be good. However, the new wave of COVID-19 infection cases in Malaysia and Europe has made operating conditions difficult and cast some uncertainties on the financial performance of the Group for Q4 of FY2021.
Calvin comments:
Noteworthy Notes
1. Crude palm oil (“CPO”) price has increased sharply, reaching a 8-year high in November this year. CPO price is expected to remain high – more than RM3,000 a ton until February 2021
PALM OIL AT 8 YEAR HIGH BUT PALM OIL STOCK PRICES STILL TO PLAY CATCT UP. SO TIME TO BUY WHILE STILL CHEAP
2. Nevertheless, due to the strong palm oil price forecasted until February 2021, we expect good financial performance from our plantation segment at least for Q2 and Q3 of FY2021.
WHAT IS TRUE FOR IOI IS ALSO TRUE FOR ALL OTHER PALM OIL COMPANIES WITHOUT EXCEPTION
3. healthy demand from the soap and personal hygiene industries and the growth in China’s economy,
PALM OIL IS CONVERTED TO SOAP & OTHER PESONAL HYGIENE INDUSTRIES. SO IT IS RECESSION PROOF
4. However, the demand for snack food consumed at homes is expected to remain strong in USA and parts of Asia.
50% OF OUR SUPERMARKET PRODUCTS LIKE SNACK FOOD GOT PALM OIL
THIS SHOWS THAT WE ARE NOW AT THE BEGINNING OF A POWERFUL BULL RUN IN PALM OIL STOCKS
Best regards
Calvin Tan Research
Singapore
Disclaimer
All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.
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