15.10.2020 (www.thestar.com.my) - PETALING JAYA: Planters are expected to post stronger third-quarter results for the financial year 2020 (FY20), thanks to the rally in crude palm oil (CPO) prices and higher production, say analysts.
According to CGS-CIMB Research, the anticipated higher third quarter (Q3) net profit by planters would be driven by a 36% year-on-year (y-o-y) rise in average CPO price at RM2,753 per tonne and 2.4% y-o-y rise in CPO production from the local estates.
“We also project Q3 net profit to be much better than Q2, with a 6.6% quarter-on-quarter (q-o-q) increase in output and 21% q-o-q rise in CPO prices, ” the research unit said in its latest report.
CGS-CIMB expects CPO prices to trade at RM2,500-RM3,000 per tonne range this month. Its average CPO price for 2020 is forecast at RM2,500 per tonne.
The key factors influencing CPO prices include the La Nina weather phenomenon’s impact on the oil seeds and palm oil supplies, China’s purchases to build up its stock reserve, and the policies on biodiesel mandates, added the research unit. A plantation expert told StarBiz that “for planters, a mere RM100 increase in the CPO price per tonne could translate into a hefty contribution to group profits.”
He projected that every RM100 per tonne change in the CPO price “could result in an addition or reduction of RM250mil for Sime Darby Plantation Bhd