Palm oil export growth, higher CPO prices, rising global demand bode well for Boustead Plantations

27.03.2017

The growth in palm oil exports, coupled with higher crude palm oil (CPO) prices and increasing global demand for the edible oils, would bode well for Boustead Plantations Bhd.

Malaysia’s palm oil exports are set to grow by between five and eight per cent this year, with CPO supported by the stronger US dollar.

Its Chairman, Tan Sri Datuk Mohd Ghazali Che Mat, said to enhance profitability, the group was looking into fast-tracking the replanting of old palm trees on its estates with improved planting materials.

“This will ultimately serve to increase yields and profitability in the long run.

“We are confident that abundant opportunities remain for the group to tap into and are focused on improving our bottom line through effective management of our plantations,” Mohd Ghazali said in its annual report 2016.

However, he said, while CPO prices were expected to remain high for the first quarter of the year, this would likely be moderated by a rebound in palm oil output in the latter half of 2017 as the effect of El Nino waned.

CPO prices are expected to remain supportive for the first half of the year as the sector enters into a low production cycle in addition to the reduced palm oil stocks.

This, coupled with favourable crude mineral oil prices and the weak ringgit, will likely see CPO trading within the price band of RM2,700 to RM3,000.

Mohd Ghazali said that in addition, the production of soyabean was projected to remain high which would further impact CPO prices.

Furthermore, he said, global policy changes might have a bearing, such as the abrupt halt to the Trans-Pacific Partnership Agreement curbing prospects for the sector.

He said the government’s intention to impose a foregn labour levy on employers with the introduction of the Employer Commitment policy could also have an impact on the plantation sector.

“We are certainly supportive of the government and understand the need for this policy. However, this should be carefully planned in consultation with industry participants,” he said.


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