Business Times

Thursday, 02 Jul, 2009

JAKARTA: Malaysian palm futures bounced back, up 1.3 per cent on yesterday after trading lower in the previous three consecutive trading days, mainly supported by a rise in prices of soybean oil and crude oil, traders said.

But traders said they doubted the rebound would last, after June palm oil exports from the world’s second-biggest producer came in below market expectations.

“Fundamentally, I think the market is still bearish. Yesterday, it just followed crude oil,” said a trader at a Kuala Lumpur-based brokerage, adding that he is looking at a near-term resistance level of RM2,300.

Oil rose above US$71 a barrel yesterday following a large drop in crude inventories in the United States, the world’s top energy consumer, and output disruption from militant attacks in Nigeria.

The benchmark September palm oil contract on the Bursa Malaysia Derivatives Exchange rose RM29, or 1.3 per cent, to RM2,259 a tonne. Overall traded volume was 12,514 lots at 25 tonnes each.

The Chicago Board of Trade July soybean contract rose 1.8 per cent, US soyoil futures were up 2.4 per cent in Asian hours, while the most-active September soyoil contract on the Dalian Commodity Exchange, which gives some direction to Malaysian palm futures, was also up 1.1 per cent.

Cargo surveyors have estimated exports of Malaysian palm oil products for June to be flat or slightly firmer at 1,227,663-1,230,741 tonnes, compared to exports in May and below the market expectation of over 1.25 million tonnes.

In the Malaysian physical market, palm oil for July delivery was traded at RM2,260-2,270 in the southern region and at RM2,250-2,265 in the central region.

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Thursday, 02 Jul, 2009

IOI Corp, Malaysia’s second largest palm oil producer, will invest RM450 million (US$128 million) this fiscal year to expand its specialty fats business to take advantage of higher profit margins.

About RM250 million will be spent on an existing refinery in Rotterdam to raise annual output of palm oil products including specialty fats by 35 per cent to 1.15 million metric tons at the facility this year. Another RM200 million will be invested in a Johor, Malaysia factory, which will supply ingredients to facilities in Europe and the US, said executive director Lee Yeow Chor.

The profit margins for specialty fats, substitutes used in food, are “a few times better” than producing palm oil, Lee said in an interview in Kuala Lumpur on June 30, without providing details. “We are growing this business.”

In the five fiscal years to 2008, IOI’s sales of specialty fats doubled to 521,719 tons, according to its financial report ended June 2008. IOI will seek ventures in South America and Russia to tap new markets for specialty fats, Lee said.
IOI shares advanced 33 per cent to RM4.72 this year, outperforming a 23 per cent gain in the benchmark Kuala Lumpur Composite Index. Read the rest of this entry »

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Business Times

Thursday, 02 Jul, 2009

IOI Corp, Malaysia’s No 2 planter, said today that the worst was over for the plantation sector as palm oil prices have recovered from last year’s slump although M&A activity would be muted.

“It’s quite obvious it will be better.

The industry including ourselves expect to see a much better fourth quarter (April-June) operating results,” IOI executive director Lee Yeow Chor told Reuters in an interview at the company’s headquarters.

Palm oil prices have now recovered more than 60 per cent from a low of RM1,331 (US$378.8) per tonne in October on surging Chinese and Indian demand as well as tight Malaysian palm oil stock levels in the first few months of 2009.

IOI, valued at US$8.37 billion, saw net profit nearly wiped out during the January-March quarter due to weaker crude palm oil prices and sizeable foreign translation losses on its US
dollar borrowings.

Lee said the company expects losses seen in the fiscal third quarter to reverse in its upcoming quarterly results.

“For fourth quarter, with the weakening of the US dollar, from end-March of around RM3.63, we expect to have some gains in currency translation for our US dollar borrowings,” he said. — Reuters

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Thursday, 02 Jul, 2009

KUALA LUMPUR, July 1 (Bernama) — Felda Global Ventures Holdings plans to invest more than RM6 billion over the next five years to expand its overseas presence in the core plantations and related businesses.

Felda Global will be the Felda Group’s single integrated commercial vehicle while Felda Holdings Bhd, the pre-existing commercial entity, will be integrated into Felda Global.

In a statement issued after the launching of Felda Global here Wednesday, Felda also said Datuk Mohd Bakke Salleh is the president/chief executive officer of Felda Global.

It was launched by Prime Minister Datuk Seri Najib Tun Razak.

Felda Global was recently established with the vision to be an integrated global multi-crop, agro-business group.

Felda Holdings, which was incorporated on September 6, 1995 is 49 percent owned by Felda and 51 percent by Koperasi Permodalan Felda. Read the rest of this entry »

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Business Times

Wednesday, 01 Jul, 2009

JAKARTA: Malaysian palm futures dropped for a third consecutive trading day yesterday as lower-than-expected June palm oil exports sparked fears over the outlook for demand, traders said.

The benchmark September palm oil contract on the Bursa Malaysia Derivatives Exchange lost RM32, or 1.4 per cent, to RM2,230
a tonne. Overall traded volume was 13,879 lots at 25 tonnes each.

The benchmark contract lost 12.9 per cent in June, its biggest monthly fall since last October.
Exports of Malaysian palm oil products for June were nearly flat at 1,227,663 tonnes compared to 1,227,894 tonnes shipped in May, cargo surveyor Societe Generale de Surveillance said yesterday.

Another cargo surveyor Intertek Testing Services estimated June exports at 1,230,741 tonnes against 1,211,716 tonnes in May.

“Exports were below what the market had expected. On Monday people expected 1.25 million tonnes,” said a trader at Kuala Lumpur-based commodities brokerage, adding that the market had already steadily cut its expectations.

The market is now anticipating a bigger increase in end-June Malaysian palm oil stocks due to lower-than-expected exports.

“Definitely, (end-June) stocks will pick up even if exports hit 1.3 million tonnes. I think the stock will be about 7 per cent higher,” the Kuala Lumpur-based brokerage trader said. Palm prices correlate inversely with palm oil stocks.

In the Malaysian palm oil physical market, the bid and ask prices for June/July delivery were quoted at RM2,240/2,270 in the southern region, and at RM2,240/2,260 in the central region. Trades were done at RM2,250 in the central region.

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