Plantation Sector - Sabah output to peak in November OVERWEIGHT

- A few plantation companies have reported their palm oil production for the month of November 2012 on Bursa Malaysia. 

- IJM Plantation’s internal FFB production rose 11.6% in October versus November’s, while IOI Corporation’s FFB output improved 6.9% MoM.

- However, Kulim’s internal FFB production declined 3% MoM. 

- On a YoY basis, these three companies recorded double-digit percentage increases in FFB production in November 2012. 

- It appears that plantation companies with oil palm estates in Sabah still experienced robust FFB production in November. 

- IJM Plantations’ oil palm estates in Malaysia are located in Sabah while Kulim’s estates are largely in Johor. 

- As for IOI, about 70% of its mature areas are in Sabah. 

- While it is clear that Sabah would experience another peak production in November, it is inconclusive as to whether FFB output in Peninsular Malaysia had reached its peak in September.

- Assuming Malaysia records a 7% MoM increase in palm oil production and a 10% MoM improvement in exports in November, the country’s inventory would inch up from 2.51mil tonnes in October to 2.56mil tonnes in November.  

- MPOB (Malaysian Palm Oil Board) is scheduled to release its monthly palm oil statistics today. 

- We are keeping our positive stance on the sector. 

- We believe that palm oil inventory would start softening in the following months as Malaysia and Indonesia enter the low output season at the start of early-2013.  

Source: AmeSecurities