Shares of palm oil plantation stocks, which have higher exposure to plantation, rose on Monday as analysts were bullish on the sector as demand outstrips supply which could support higher prices.
At 0316 GMT, shares of Golden Agri-Resources (GAGR.SI) gained 2.5%, Indofood Agri Resources (IFAR.SI) rose 3.2% and First Resources (FRLD.SI) added 1.9%.
At 0316 GMT, shares of Golden Agri-Resources (GAGR.SI) gained 2.5%, Indofood Agri Resources (IFAR.SI) rose 3.2% and First Resources (FRLD.SI) added 1.9%.
However, Wilmar International (WLIL.SI) underperformed the palm oil stocks, rising 0.7%.
“A company that owns a lot of upstream estates can capture most of the run-up in crude palm oil (CPO) prices through higher selling prices,” said Ivy Ng, an analyst at CIMB Research.
“The reason why Wilmar share price has lagged its peers is because its earnings leverage to the higher CPO prices is much lower,” she said, adding that the Chinese government’s price controls on branded cooking oil has hurt the firm’s ability to pass on the higher raw material costs to consumers.
Technicals are also supporting an upturn in prices.
According to Reuters technical analysis, Malaysian palm oil (KPOc3) is poised to rally to 4,247 ringgit per tonne in the first quarter or about 11% higher than current levels.
DBS Vickers analysts expect CPO prices to be underpinned by the weak U.S. dollar, strong demand from China and supply shortage of substitute soy beans, adding that its stock picks in the plantation sector are Indofood Agri and First Resources.
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