SINGAPORE (July 13): Maybank Kim Eng is maintaining its “neutral” call on the plantations sector, given weak demand for crude palm oil (CPO) from major importing companies have placed a dampener on prices.

To recap, CPO prices had rallied from a low of RM1,806 per tonne ($611 per tonne) last Aug to hit a high of RM2,716 per tonne in April. This came on the back of a fall in yields for fresh fruit bunches which resulted from the El Nino drought.

However, CPO prices corrected quickly in June after Malaysia’s Palm Oil Board announced stockpile hit in May a five-year low of 1.65 million metric tonnes. “We gather the sudden decline in CPO price was due to weak demand for palm oil at major importing countries and market pricing in a yield recovery ahead of its time,” says Kim Eng analyst Ong Chee Ting in a note on Wednesday.

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