Is the growth of palm oil companies really unstoppable?

SINGAPORE (Dec 16): The recent rally in crude palm oil (CPO) prices has surprised analysts and boosted locally listed palm oil stocks.

Shares in Indofood Agri Resources, which had been trading sideways since the middle of the year, shot up considerably in early December to 58.5 cents — close to the 52-week high of 62.5 cents that they hit in March. Wilmar International’s stock has also rallied and was up more than 23% so far this year. Golden Agri-Resources, the world’s second-largest oil palm planter, is now worth 25% more than it was a year ago.

But the higher palm oil prices may not offer as big a boost to the palm oil companies as investors expected. Analysts say that’s because there are still some factors weighing down CPO prices and that the rally was not as strong as it could have been.

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