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Hot Sector – Will the rally in Plantation stocks continue as CPO price hits five-month high?

Thu 24 Jan 2019

Malaysian palm oil futures rose to their highest in nearly five months yesterday charting a fourth day of gains, on a weaker ringgit and tracking gains in U.S. soy oil on the Chicago Board of Trade.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 0.9 percent to 2,283 ringgit ($552.12) a tonne at the close of trade.

It earlier rose as much as 1.1 percent to 2,288 ringgit, its strongest levels since September 2018, it was reported.

Although the market was earlier down, traders in the commodity had said it could firm up as palm oil export data so far showed rising demand.

Malaysian palm oil shipments during Jan. 1-20 rose in the range of 9-13 percent from a month earlier, according to cargo surveyors Intertek Testing Services, AmSpec Agri Malaysia and Societe Generale de Surveillance.
The Malaysian Palm Oil Board’s (MPOB) had earlier released a projection for a strong price recovery in 2019.

According to analyst reports, the MPOB said palm oil prices are expected to recover based on higher biodiesel mandate in Malaysian and Indonesia, a weaker ringgit and the potential occurrence of a El Nino event.

MPOB had forecast a CPO price average of RM2,500/mt in 2019.

It also predicted a sharp fall in inventories by the year-end to 2.5 million metric tonnes, a 22% drop from the historic high level of 3.22 million metric tonnes in 2018.

MPOB also projected palm oil production to rise 4.1% from 19.5 million metric tonnes to 20.3 million metric tonnes, following a drop of 2% last year.

Exports are expected to rise 4.3% from 16.49 million metric tonnes to 17.2 million metric tonnes.

Plantation stock prices had fallen hard last year in 2018 (and we had avoided it) but the fall made it cheaper for elite traders to buy in this year.

Plantation: The hard fall in 2018 and rally in plantation stock prices in Jan 2019

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Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

And the opportunities favour the early spotters under the mPower Algorithm.

Plantation stock prices have rallied earlier this year in line with the bullish recovery in prices and elite traders should have at least gotten into one plantation stock which flashed a strong buy call by our Master Algorithm and is up over 40% in the last two weeks.

And there is still more upside given that the stock has practically little resistance on the way up and elite traders should continue to hold this particular stock.

Which other plantation stocks should you include in your trading portfolio?

Check the algorithm tables below and find out the right stocks which is poised to move to consider for your portfolio (if you have not gotten in earlier).

Care must be taken as not all plantation stocks are of equal and stock picking the right one is key to the sector for now.

Watch for a break of the critical levels for plantation stocks that have yet to move to get in early before the herd does and set the appropriate risk-management stop loss shown in the table.

Plantation: Stock picking is the key

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Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

 

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