“Malaysia’s crude palm oil (CPO) output rose 11.8% m-o-m in August, while stocks rose 25.3% to 1.87 million tonnes, bringing stock/usage ratio back to historical mean levels. With peak CPO crop and US soy crop coming out in 4Q2021, we continue to expect a moderation of prices in the medium term. The ESG discount, which is holding back share price performance, is also expected to remain prevalent,” writes Hoe.
Flagging demand and forced labour issues are weighing on plantation stocks, say analysts, with Malaysian and Indonesian planters moderating production output.
In a Sept 13 note, RHB Group Research analyst Hoe Lee Leng is remaining “underweight” on the plantation sector, with a “neutral” recommendation on eight out of 13 stocks covered.
