UOBKayhian on 16 Dec 2014
At a crossroads. We believe the crude palm oil (CPO) market has yet to find an
equivalent point and is waiting for a clearer indication on supplies disruption from the
bad weather and biodiesel demand risks after the sharp fall in crude oil prices. We
believe the current CPO price trading range is supported by the potential tightening of
global edible oilseeds and edible oil supplies in 2015.
Maintain MARKET WEIGHT as there is no strong catalyst to send CPO prices to the
recent high of RM2,900/tonne due to ample edible oilseeds supply. Maintain BUY on
First Resources (FR SP/Target: S$2.80), Bumitama Agri (BAL SP/Target: S$1.40) and
Sarawak Oil Palm (SOP MK/Target: RM6.75).
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