Crude palm oil (CPO) regained grounds Tuesday in both physical and futures markets. October price of CPO, however, is now 20% below September’s average price as more companies reported higher output in Indonesia and Malaysia this peak harvesting season. In this report: (1) Bakrie Sumatra Plantations & (2) Genting Plantations.
October contracts gained RM40 to RM2268 Tuesday, while the benchmark December contracts jumped RM70 to RM2438 per ton. January and February 2013 contracts also settled higher at RM2504 and RM2551 per ton respectively.
In Jakarta’s phyisical market, KPB Nusantara, the joint marketing office of state plantations, sold nine out of 14 packages or about 12,000 tons at Rp6584-6744 per Kg (VAT 10% included). Five packages (5500 tons) were withdrawn on low bids.
Astra Agro Lestari, on the other hand, managed to sell all of six CPO packages (11,000 tons) auctioned off Tuesday at Rp6550-6750 per Kg. That means AALI’s net price has dropped 23% from the average price in eight months of 2012 at Rp7774 per Kg.
Pressures would still be out there in the short term due to higher CPO output in Malaysia and Indonesia. IOI COrporation reported 71,943 tons of CPO output in September, grew 20% over August. TDM, also a Malaysian company, also reported 19% growth in September over August 2012.
The current low price is expected to attract more buyers from India and China, but that could also mean a slightly weaker first quarter of 2013.
Plantation shares, meanwhile, opened mostly lower on broad market sentiment this morning. Wilmar International, the largest player in the commodity, dropped 1.6% to S$3.07, way below some brokerage firms’ target price. Kencana Agri Limited also lost 1.52% in the opening hour of SGX, while Sime Darby and PPB down 0.5% each in Kuala Lumpur.
BAKRIE SUMATRA PLANTATIONS: The stock has collapsed to its new low due to poor performance in the first half and expensive financial costs. Bambang Aria Wisena, CEO of Bakrie Sumatra Plantations (UNSP), said the company is in talks with three-four lenders to refinance the expensive NDB Facility, which carries 25% interest rate. The company expects such refinancing can be completed soon as rating agency Standard & Poor’s has revised up UNSP’s rating to CCC with stable outlook.
DESA JAYA CONFLICT: Seputar Indonesia newspaper reported from Aceh that hundreds of people of Payah Genteng village burned down tens of hectares of PT Desa Jaya’s oil palm plantation due to years of conflict over land. The recent action is a retaliation of the company’s decision to destroy rubber trees planted by local people in the same area.
GENTING PLANTATIONS: Genting Plantations has completed the establishment of a joint venture for the development of 74,000 hectares of land in Kapuas and Barito Selatan regencies of Central Kalimantan province. Genting Plantations Berhad now controls 63.2% shares in Global Agripalm Investment Holdings Pte Ltd, the JV for the plantation projects.
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