Low Sept stockpile supportive of CPO price for now - MayBank Kim Eng
Fearing a strong ID output recovery in 4Q and 2021
Healthy September exports have helped kept Malaysia’s stockpile low, aided by zero CPO export levy and weak 3Q20 Indonesian (ID) output. We believe a relatively stronger 4Q20 ID’s FFB output recovery may cap near term CPO price upside. Still, there is upside risk to our 2020’s CPO ASP of MYR2,400/t (YTD: MYR2,589/t) but this is priced in, in our view. Next year, given expectation of a strong output recovery post biological tree stress in ID, aided by anticipated good rainfall due to La Nina, we are keeping our CPO ASP est. of MYR2,400/t. Our sector NEUTRAL call is unchanged. BUYs remain with FR, BAL, SOP, BPLANT. SELL IOI and GENP.
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